The EU's New Methods of Protectionism

The demand for free trade sounds rather hollow when one side cheats with export subsidies, artificially devalues its own currency, and in this way gains advantages at the expense of its trading partners. 

Thomas Kolbe | October 13, 2026

Emmanuel Macron and Friedrich Merz are pushing for a so-called “Kill Switch.” The goal: to shield the euro economy from supposedly unfair competition. An anti-therapy, since Europe needs a fitness program for its internal market instead.

How should one deal with cheaters? The demand for free trade sounds rather hollow when one side cheats with export subsidies, artificially devalues its own currency, and in this way gains advantages at the expense of its trading partners. Economists call this kind of trade protectionism a beggar-thy-neighbor policy.

Its aim is to shift internal problems such as unwanted unemployment onto third parties through a rapid, but usually short-lived, economic stimulus. Over the decades, China has honestly earned its reputation as the champion of this discipline.

China’s currency, the yuan, would have to trade substantially higher to offset the country’s enormous trade surplus. Its scale is shown by the 2025 customs figures: China exported goods worth around $3.77 trillion and imported around $2.58 trillion.

The surplus therefore reached a record $1.189 trillion -- more than one percent of global GDP. That is not the size of the export economy, but simply the difference between goods exports and goods imports.

An analysis by economists at the U.S. Federal Reserve puts the yuan’s undervaluation on a real, trade-weighted basis at around 20 percent. In addition, capital controls restrict China’s bond........

© American Thinker