EU Reportedly Prepares Trade Deterrence Tool That Could Block China From Single Market

The European Union is reportedly preparing a trade deterrence instrument that would completely shut off access to the bloc's single market if a rival, such as China, attacks the EU's economy, according to people familiar with the plans. EU leaders meeting in Brussels on Thursday asked the European Commission to develop and present a formal proposal for the measure by the end of the year, with negotiations expected next year, one of the people said. Designed as a second-strike measure to deter countries from initiating a trade war with the bloc, the proposed tool follows recent bilateral friction where the EU reportedly negotiated a China sanction swap to protect critical semiconductor supply lines. The European Commission is also scheduled to present a separate instrument in December aimed at diversifying supply chains ahead of another EU leaders' summit, while Beijing has threatened to retaliate if the bloc introduces new trade tools or discriminatory restrictions targeting Chinese firms or products.