EU Rallies Behind Tougher Trade Powers to Counter China, Braces for Retaliation

European Union leaders have rallied behind a sweeping new set of trade powers aimed at countering what they describe as coercive economic practices, including the ability, in extreme cases, to cut China or other rivals off from access to the bloc's market of 450 million consumers.

The push comes just days after the EU and China reached a surprise agreement in Beijing capping Chinese hybrid vehicle imports into the bloc at 350,000 units annually, a deal European officials say falls short of resolving broader concerns and does not go far enough to curb Chinese export pressure across other sectors.

China's Ministry of Commerce issued a pointed warning in response, stating that "the European side cannot fantasize about gaining benefits by exerting pressure, nor should it underestimate China's determination and capability to protect its own interests."

European officials are reportedly gaming out how Beijing might escalate and how the bloc should respond, with expectations that China will again attempt to test EU unity by seeking to play individual member states off against one another, a tactic officials say has worked for Beijing in past disputes.

The standoff marks an escalation in what has become one of the most consequential trade relationships in the global economy, with both sides now signaling a willingness to use increasingly forceful tools, raising the odds of a broader trade confrontation even as negotiators continue working toward narrower sector-specific agreements like the recent hybrid vehicle deal.