London Daily

Focus on the big picture.
Monday, Oct 06, 2025

China stands to win a transatlantic trade war, EU minister says

China stands to win a transatlantic trade war, EU minister says

‘A subsidy rally is a very dangerous game,’ says Czech trade minister.

China stands to be the only winner if a subsidy war breaks out between Europe and the United States, the Czech minister who chaired a meeting of EU trade ministers on Friday warned.

“A subsidy rally is a very dangerous game," Jozef Síkela told reporters in Brussels.

"The winner might then sit on [another] continent — not in Europe, and not on the American one,” said Síkela, trade and industry minister of the Czech Republic, which currently holds the presidency of the Council of the EU. A spokesperson made it clear that Síkela was referring to China.

Trade tensions are escalating between the EU and U.S., with Brussels fuming at America’s Inflation Reduction Act, which grants $369 billion worth of subsidies and tax breaks to U.S. green businesses like electric cars and renewable energy.

EU countries fear that the U.S. law — key parts of which will enter force on January 1 — could suck investments out of Europe and hollow out the bloc's industrial base.

About $200 billion worth of the U.S. handouts are illegal under World Trade Organization rules, French Trade Minister Olivier Becht told reporters before the meeting.

If the U.S. doesn’t modify its Inflation Reduction Act, the EU should use “coercive” measures to ensure that European companies benefit from the same conditions as American companies, Becht also said.

The clash comes at a time when Western governments are already under huge fiscal pressure from the energy-price shock caused by the war in Ukraine and the aftermath of the COVID-19 pandemic. With the global economy already on the skids, a headlong subsidy race could prove to be ruinous — with Europe facing the greater risks because it doesn't have the financial firepower to go toe to toe with Washington.


Tit for tat


Germany and France are mulling tit-for-tat retaliation against the U.S. in the form of a “Buy European" act that would encourage EU consumers to buy locally-made goods.

And if things escalate, the EU could retaliate by imposing tariffs and duties on U.S.-made goods. It could also deploy a new international procurement instrument that closes public tenders to companies from countries that discriminate against the bloc, an EU diplomat said.

But EU trade chief Valdis Dombrovskis urged people to see the bigger picture, stressing the need for maintaining transatlantic unity in the face of Russia’s invasion of Ukraine.

“I was in Kyiv last Friday. The situation is dramatic, with continuous Russian attacks on vital infrastructure. People have been deprived of water, heat and electricity,” Dombrovskis said.

“We need to deepen and sharpen transatlantic unity in the face of these horrific attacks. And we need the U.S. to maintain its support so that Ukraine can win this war."

In this somber geopolitical context, Dombrovskis warned against “the danger of conflating the Inflation Reduction Act with our broader relationship with the United States.”

Newsletter

Related Articles

0:00
0:00
Close
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
×