Protectionism no answer to trade disputes

In a world increasingly interconnected by trade and economic globalization, the proposal made on Monday by a French government agency to impose a 30 percent across-the-board tariff on Chinese goods or devalue the euro against the Chinese yuan by 30 percent is obviously a misguided approach that threatens to hinder fair competition and undermine the principles of free trade. Such measures, while seemingly protective of domestic industries, are ultimately detrimental to both the European and the global economy.

The call for protectionism arises from concerns about the competitive pressure brought by Chinese industries, which have made rapid inroads in recent years into high-quality sectors traditionally dominated by European manufacturers, according to the strategic report made by the Haut-Commissariat à la Stratégie et au Plan, a French government advisory body. It highlights the perceived threat to Europe's industrial base, particularly in areas such as electric vehicles, machine tools, and batteries.

However, history has shown that protectionist policies, whether through tariffs or currency manipulation, do not lead to sustainable economic prosperity. As the old dictum goes, you can't devalue your way to prosperity. Not to mention that trade wars only increase consumer prices and damage international relations.

There is no doubt that imposing such high tariffs would definitely escalate tensions between China and the EU, leading to retaliatory measures that could harm European exports. Moreover, China's economy is already deeply integrated into the global supply chain, and punitive tariffs could disrupt this integration, affecting not only Chinese industries, but also European companies that rely on Chinese components and markets.

Last year, exports of French wine and spirits reportedly fell to their lowest volume in at least 25 years, partly due to duties that China imposed on European brandy, mostly French cognac. This was after the EU slapped tariffs of up to 38 percent on Chinese electric vehicles, with France being a key proponent.

Industry group FEVS said sales to China dropped 20 percent to 767 million euros ($914 million) in 2025 as anti-dumping duties sharply curbed ?shipments of cognac and other wine-based spirits. This has led French industry insiders to bemoan that geopolitical tensions between France and China marked the end of cognac in China.

Meanwhile, currency manipulation as a tool for gaining trade advantage is also a bad suggestion as it is explicitly discouraged by the Articles of Agreement of the International Monetary Fund. Devaluing the euro to counteract Chinese imports would not only contravene these international guidelines, but also risk destabilizing the European economy. Currency devaluation can lead to inflationary pressures, eroding consumer purchasing power and potentially triggering a cycle of competitive devaluations among trading partners.

The fundamental flaw in the French proposal lies in its short-term focus on shielding domestic industries without addressing the underlying issues of competitiveness and innovation. Instead of resorting to protectionism, Europe should invest in enhancing its industrial competitiveness through innovation, research, and development. Building a robust and dynamic industrial base requires policies that encourage technological advancement and workforce skills development, not isolationist measures that stifle competition.

Furthermore, the global economy thrives on cooperation and dialogue. The proposal for sweeping tariffs and currency devaluation contradicts the spirit of international collaboration that has underpinned decades of economic growth and development.

Rather than erecting barriers, the EU, including France, should engage in constructive dialogue with China to address trade imbalances and promote fair competition. The recent video meeting between Chinese Vice-Premier He Lifeng and French Finance Minister Roland Lescure, during which they exchanged in-depth views on economic and financial cooperation between the two countries, exemplifies the potential for collaboration in addressing economic challenges.

It is thus imperative that the EU, alongside its global partners, remain committed to the principles of free trade and open markets. The bloc should have a long-term perspective and open attitude, and work with China to navigate the complexities of the global economy and promote the sustained and sound development of China-EU economic and trade ties.

Protectionism is not the answer.