Overcapacity of anxiety in Brussels 'threat' to EU

The European Union is resorting to an old habit: when competitiveness declines, blame the outsider. On Tuesday, the European Parliament backed a plan to raise tariffs on imported steel from 25 percent to 50 percent, with the measure set to take effect on July 1. Officially, the move is designed to shield the European industry from "unfair competition". In practice, primarily targeting China, it is another sign that Brussels is drifting toward protectionism while continuing to speak the language of "free trade".

The move is further evidence, if any were needed, that the excess today is not capacity, but the EU's anxiety.

On Tuesday, the United Nations released its mid-2026 World Economic Situation and Prospects report, warning that the Middle East crisis has delivered another blow to the fragile global economy. The report projects global growth at only 2.5 percent this year, while inflationary pressures are expected to intensify in the developed economies and uncertainties deepen. Against such a backdrop, the last thing the world economy needs is another spiral of tariff barriers and retaliatory measures by the self-proclaimed "champion" of "free trade".

The steel tariff decision forms part of a broader trend in Brussels toward protectionism. Chinese electric vehicles, batteries and green technology exports have all come under scrutiny in recent months, with some EU officials ignoring a basic reality: industrial competition has intensified because China has become technologically stronger, not because European companies suddenly forgot how markets work.

In many sectors, Chinese companies simply produce high-quality goods at competitive prices. That is efficiency, not a calculated "threat".

Washington has encouraged this narrative. On Tuesday, during the second day of the meeting in Paris of G7 finance ministers and central bank governors, the US treasury secretary again used the pretext of "trade balance" to accuse China of "undermining" global economic stability. Such politicized rhetoric finds receptive ears in an anxious Brussels.

But China has never pursued trade surpluses as a strategy. The China-EU trade imbalance, for instance, is the product of multiple structural factors: differences in industrial specialization, positions within global supply chains, patterns of consumer demand and the nature of international production networks. Crucially, the imbalance has also been aggravated by the EU's own restrictions on high-technology exports to China.

The EU's protectionist moves will not help its enterprises restore competitiveness. Instead, they will raise costs and reduce the incentives for innovation in the bloc while fragmenting international trade.

The UN warning should serve as a reminder that the world economy remains deeply interconnected. Fragmentation carries a price. Unilateral protectionist measures inevitably invite reciprocal responses, damaging the growth prospects for all sides.

This makes the political rhetoric emerging from Brussels particularly troubling. On Sunday, EU foreign policy chief Kaja Kallas urged member states to remain united, claiming that China, the US and Russia all seek to divide the EU. Yet viewing China in that light reflects the growing ideological rigidity in parts of the EU's policy circle rather than the reality of China-EU relations.

China regards the EU as a partner and an important pole in a multipolar world. Bilateral trade remains one of the best indicators of an economic relationship. Neither side benefits from transforming economic competition into systemic confrontation.

The EU now faces a consequential choice. It can continue down the path of protectionism, using "overcapacity" as a slogan to justify higher barriers and industrial containment. Or it can uphold the principles of openness and competition that once formed the foundation of its prosperity.

At a time when global growth is weakening, escalating trade tensions with China would amount to economic self-harm to the EU. The world economy does not suffer from an excess of Chinese production. It suffers from a shortage of strategic clarity in Brussels.