Von der Leyen vows to fire "trade bazooka" at China

On October 25, European Commission President Ursula von der Leyen pledged to use all available means to counter Beijing’s damaging export restrictions on rare earths.

Speaking at a conference in Berlin, von der Leyen warned that the trade rifts between China and the US were hitting EU industries hard, per Euractiv.

“China has dramatically tightened export controls over rare earths and battery materials,” she said, warning that 90% of the EU’s consumption of rare earth magnets comes from Beijing.

Von der Leyen also stepped up the rhetoric, comparing China’s control of rare-earths to Europe’s previous dependence on Russian fossil fuels, exposed when Moscow invaded Ukraine in 2022.

“Europe cannot do things the same way anymore. We learned this lesson painfully with energy; we will not repeat it with critical materials,” she said.

The Commission President also threatened action, and in coordination with G7 partners.

“We are focusing on finding solutions with our Chinese counterparts. But we are ready to use all of the instruments in our toolbox to respond if needed”.

This includes the so-called “trade bazooka”, officially known as the Anti-Coercion Instrument (ACI) and the EU’s most powerful trade weapon.

The ACI can cause widespread economic damage if deployed. Imposing investment restrictions, withdrawing intellectual property protections, suspending individual companies’ licences, banning access to EU public procurement markets, and sanctions targeting specific individuals, are all possible under the instrument. And, it can be used against both goods and services.

Earlier this week, EU trade chief Maroš Šefčovič said there was “no interest in escalation” against China after a two-hour video call with his Chinese counterpart Wang Wentao.

During Thursday’s EU leaders summit, French President Emmanuel Macron said the Commission should mull blasting the “trade bazooka” at China.

Germany also signalled it may also be open to tougher measures, two diplomats told Euractiv.

“Germany has never backed coercive steps against China before,” one of them said, noting that Chancellor Fredrich Merz was under pressure from carmakers.

By Khagan Isayev