China’s commerce ministry issued a strong warning to the European Union ahead of scheduled high-level talks in Beijing, declaring that China would respond firmly if the EU imposes any restrictions on Chinese companies or products. The ministry emphasized that introducing such curbs amidst ongoing trade negotiations would severely damage mutual trust and disrupt the progress of dialogue between the two economic powers. This statement comes as Europe seeks to reduce its record trade deficit with China by October.

The EU has been pressing for significant results from China during the summer trade discussions, with EU Trade Commissioner Maroš Šefčovič warning that a lack of concrete outcomes could lead to harsher measures against Beijing. Šefčovič is expected to visit China next week to continue negotiations. Concurrently, reports indicate that some European countries, including Germany and France, are preparing a joint proposal urging the European Commission to develop tools capable of quickly cutting Chinese businesses off from the European market if needed.

According to analyst Noah Barkin from the Rhodium Group, the EU is considering measures similar to the U.S. Section 301 tariffs, designed to swiftly counter perceived unfair trade practices. Such “301”-style instruments, referenced in China’s ministry statement, could allow Brussels to impose rapid trade restrictions on China, signaling a toughening stance within the bloc against Chinese business practices.

Despite ASEAN overtaking the EU as China’s largest goods trading partner since 2020, China Customs data shows Europe still holds the world’s biggest trade deficit with China, recently surpassing the U.S. When factoring in services, the EU remains China’s top trading partner, with combined trade valued at nearly $1 trillion last year. The trade relationship’s size and complexity amplify the stakes involved in the evolving trade tensions.