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Merz and Macron want the EU to hit back harder — and faster — against trade threats

BERLIN — The European Commission needs the power to act much faster against trade threats, German Chancellor Friedrich Merz and French President Emmanuel Macron urged in a joint letter on Monday.

The leaders of the EU’s two most powerful and populous countries want Brussels to be able to act more quickly and decisively in a trade confrontation — while making it harder for EU capitals to block action.

The proposal seeks to strengthen the hand of Trade Commissioner Maroš Šefčovič, who flies to Beijing on Thursday for the final round of talks in a four-month process where Brussels is seeking to rebalance the EU’s trading relationship with China.

Merz and Macron said the Commission should be empowered to restrict, or even completely cut off, imports from countries seen as creating “severe and systematic distortions” in the single market. In their letter and a joint position paper, they call for urgent action, saying the EU’s existing trade defense toolbox “does not suffice anymore.”

“Without delaying the full use of the existing set of instruments, we need a comprehensive framework to complement our toolbox with new legal instruments — in a lean and non-bureaucratic way,” they wrote.

One senior German official, who was granted anonymity to speak candidly, described the tool as a “second-strike weapon” that could be deployed in the event of an escalating trade war.

“We can see that certain players have important, powerful instruments at their disposal,” the official said, pointing to the sweeping so-called Section 301 tariffs imposed by U.S. President Donald Trump and China’s dominance of critical-mineral supply chains. The EU, they explained, needed its own countermeasures. 

“When trade rules are not respected, we need to be credible regarding the fact that access to the internal market cannot be guaranteed,” said an official from Macron’s office, noting that “dialogue does not preclude our determination to protect our most vulnerable sectors.” 

The French official said the procedure for activating the new measures should be based on the one that already exists for anti-dumping cases. This allows the Commission to take action without first seeking a green light from EU capitals. 

“We can’t keep waiting — for months or sometimes even years,” the French official said. 

A new bazooka

While the joint letter doesn’t mention China by name, it clearly relates to the bloc’s €1-billion-a-day trade deficit with the world’s leading exporter and growing concerns about the impact of Chinese overcapacity on European industry.

The existing Anti-Coercion Instrument, also known as the EU’s trade “bazooka,” in theory gives the Commission enormous powers to restrict imports in response to actions that are considered economic coercion.

In practice, however, activating the ACI requires months of investigation and the support of a qualified majority of EU governments. Divisions among capitals have previously complicated efforts to agree on trade measures targeting China.

The new instrument proposed by Berlin and Paris — which could either update or replace the ACI — would make it much harder for EU member countries to block swift action. Commission measures would stand unless a “reverse” qualified majority of countries voted to block them. 

Bernd Lange, who heads the European Parliament’s trade committee, welcomed the Franco-German letter as a step forward. The German Social Democrat negotiated on behalf of the Parliament during the development of the ACI, pushing unsuccessfully to give the Commission more leeway to activate the instrument. 

“It was so complicated,” Lange said. “If there is now a shift in the mindset of the Council, it’s really good.” 

Watershed moment

Sander Tordoir, chief economist at the Centre for European Reform, called the letter and position paper a “watershed” moment. 

“What the two leading European capitals are signaling is that they want to flip the switch and have a more structured, comprehensive set of policies to slow down the impact of the second China shock on European industry,” said Tordoir, who has advocated that Europe adopt U.S.-style 301 tariffs in the past.  

Germany’s shift toward a more aggressive trade posture is particularly significant given Berlin’s previous reluctance to back stronger EU trade defenses.

“One of the major actors watering down the ACI back in the day was in fact Germany,” Tordoir said. “Germany has transitioned from hesitator-in-chief on stronger European trade tools to actively backing a number of concrete proposals.” 

The document is part of broader Franco-German negotiations on the EU’s top economic files. The talks were launched by Macron and Merz after a joint ministerial meeting in Cologne in July, when the two leaders said they were converging on a more aggressive stance toward China. 

The Franco-German letter also calls on the Commission to take new steps to diversify European supply chains and lessen dependency on Chinese imports. The Berlaymont has already announced that it is developing a diversification instrument aimed at encouraging manufacturers to wean themselves off cheap Chinese imports. It plans to publish the proposal by the end of the year.

EU leaders will discuss the outcome of Šefčovič’s trade mission to China at a summit in Brussels on Oct. 15-16. 

Hans von der Burchard reported from Berlin, Giorgio Leali from Paris and Carlo Martuscelli, Jordyn Dahl and Camille Gijs from Brussels. This article has been updated.

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Securing energy and trade flows in geo-economic conflicts

Decades ago, the world treated global trade as a neutral ground that helped energy markets in becoming more integrated, as we still see them today. The standard view in policy circles was that trade made countries more secure and stable. Governments therefore now use tariffs and export controls as a chokepoint of power. Today interdependence between countries became a double-edged sword. Europe, for instance, faced this back in 2022, when the Russian gas that it long treated as a reliable commodity became a prominent tool of pressure overnight.

Mouza Hasan Almarzooqi, director of the Economic Studies Department, TRENDS Research and Advisory

Despite the shifts towards digital economies and the massive investments that countries have been pouring in it, a major share of world trade still goes through narrow water ways. The Strait of Hormuz, Suez Canal, bab el-Mandeb Strait and many more corridors could lead to world trade disruption if partly closed. In 2023 attacks on merchant ships in the Red Sea led to big containers switching their usual route through the Suez Canal and going around Africa instead. It resulted in higher insurances, increased fuel consumption and longer delivery times. At the same time, extreme drought forced the Panama Canal to cut daily Transits. Two of the worlds key sea shortcuts were constrained at once. Securing energy and trade flows in geo-economic conflicts is no longer only about protecting ships and pipelines; it is also about building systems flexible enough to absorb shocks that are now certain to come. The Hormuz crisis of 2026 made that lesson costly, and the states that act on it now will set the terms of the next era of global trade.

Despite the shifts towards digital economies and the massive investments that countries have been pouring in it, a major share of world trade still goes through narrow water ways.

Two years later, on the 28th of February 2026 as the US-Israel-Iran war started, The Iran Revolutionary Guard shut the Strait of Hormuz to control the oil that was being exported from the Gulf Cooperation Council. Within two weeks, the International Energy Agency ‘IEA’ reported that the exports through the Strait of Hormuz had fallen to a tenth of normal flows. Asian importers took the worst hit, as they highly depend on the Gulf’s crude. The damage, however, showed up in prices other than oil; for instance, urea fertilizers also flow through the strait, and its supply disruption led to higher food prices. Gulf countries demonstrated their resilience by finding alternatives to exporting away from the strait of Hormuz. The UAE, for example, Created the Habshan-Fujeirah line, which started construction in 2008 and was finished in 2012, to secure energy trade even if faced by geographical obstacles. Securing energy and trade flows is a significant topic to be discussed at the TRENDS Annual Forum on October 12, 2026, under the theme “Sustainable Security: The Post-War Future of the Middle East”.

The Middle East plays a crucial role in the global economy. It’s often faced with exposure to regional conflict, but it can secure trade through several approaches.

Via TRENDS

The Middle East plays a crucial role in the global economy. It’s often faced with exposure to regional conflict, but it can secure trade through several approaches. First, spreading the risk by creating more routes through land. The India-Middle East-Europe Economic Corridor, currently in the developments phase, is one initiative that seeks to connect several countries through one line of trade. The second approach is “Friend-shoring”, which protects sensitive supply chains by moving them to ally countries. This can be high in cost but works most efficiently when a country is faced by war. This approach demonstrates the benefits of economic partnerships and investing in ports in different geographies to secure supply chains especially given that more the 80 percent of world trade moves by sea. The third option is stockpiling. In March of 2026 the IEA agreed to release 400 million barrels of emergency reserves. Those reserves will not end the whole crises but will provide time for diplomacy to act.

These matters influence not just local residents but also have global repercussions, affecting everyday experiences worldwide through shifting costs for fuel, farming, and food supplies.

Trends Global, operating as part of TRENDS Group, is organizing its Annual Forum to examine critical issues and inquiries impacting the security of the Middle East. These matters influence not just local residents but also have global repercussions, affecting everyday experiences worldwide through shifting costs for fuel, farming, and food supplies. By gathering a diverse group of political figures, scholars, and leaders from the corporate and defense sectors, the event intends to explore the ongoing transformation of the territory. Establishing lasting stability in the post-conflict Middle East requires a departure from past patterns, ensuring that future security is not merely a reaction to a continuous cycle of emergencies.


Bibliography

  1. European Commission. (2022). REPowerEU: Affordable, secure and sustainable energy for Europe. https://commission.europa.eu/topics/energy/repowereu_en 
  2. Farrell, H., & Newman, A. L. (2019). Weaponized interdependence: How global economic networks shape state coercion. International Security, 44(1), 42–79. https://direct.mit.edu/isec/article/44/1/42/12237/Weaponized-Interdependence-How-Global-Economic 
  3. Gulf producers race to bypass Hormuz and bab el-mandeb – oil & gas middle east. Accessed September 27, 2026. https://www.oilandgasmiddleeast.com/news/gulf-producers-race-to-bypass-hormuz-and-bab-el-mandeb
  4. International Energy Agency. (2026, March 11). IEA member countries to carry out largest ever oil stock release amid market disruptions from Middle East conflict. https://www.iea.org/news/iea-member-countries-to-carry-out-largest-ever-oil-stock-release-amid-market-disruptions-from-middle-east-conflict 
  5. International Monetary Fund. (2024, March 7). Red Sea attacks disrupt global trade. https://www.imf.org/en/blogs/articles/2024/03/07/red-sea-attacks-disrupt-global-trade

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