Germany Prepares for Trade War With China by Identifying Chinese Dependencies

Berlin is mapping economic vulnerabilities across China's industrial supply chains as Germany prepares potential countermeasures ahead of a full-scale European trade dispute with Beijing.

The informal government assessment uses granular trade and corporate data to identify critical Chinese dependencies on European technology, specialized components, and maintenance services.

Chancellor Friedrich Merz has hardened Berlin's posture toward Beijing, calculating that Germany requires independent leverage to avoid being overwhelmed by U.S.-China rivalry.

Semiconductor and Machinery Bottlenecks

Initial findings highlight German suppliers like Trumpf SE and Carl Zeiss AG, which provide critical components for ASML lithography equipment, as key vulnerabilities in China's high-tech sector.

Specialized semiconductor firms including Siltronic AG, Aixtron SE, and SUSS MicroTec SE also occupy indispensable niches across the microchip manufacturing chain.

Beyond halting fresh machinery shipments, Berlin's most effective point of leverage involves terminating maintenance and technical support for existing equipment operating inside China.

While ASML cannot export its most advanced machines to Chinese clients, the country remains heavily reliant on foreign servicing for its vast installed base of older systems.

Advanced patented medical products and high-tech industrial machinery represent additional areas where Chinese firms have failed to develop domestic replacements.

Strategic Deterrence and Game Theory

The vulnerability mapping forms part of 34 non-public national security council initiatives intended to diminish strategic exposure and counter economic coercion.

“Yes, there are dependencies, but these dependencies are mutual. That also applies to issues such as rare earths,” Merz said this month when asked how to deal with China. “We can only withstand unfair competition if we defend ourselves against it.”

Outside high-technology sectors, disruptions to intermediate goods in chemicals, steel, and plastics could threaten millions of Chinese jobs and undermine regional social stability.

“China plays foul by handing out massive subsidies and preventing a currency appreciation, but we want to remain fair,” said Juergen Matthes, head of international economic policy at the German Economic Institute.

“The point isn’t to use all these instruments. It’s to preserve them as game theory options, because otherwise you’ve already lost before negotiations even begin.”

European Solidarity and Escalation Risks

German officials maintain the assessment represents contingency planning aimed at establishing reciprocity rather than an aggressive decoupling from the Chinese market.

Any potential trade measures would require coordination through the European Union, which currently faces a daily deficit with Beijing exceeding €1 billion ($1.1 billion).

Berlin and Brussels simultaneously seek to avoid managing dual trade disputes with Beijing and Washington, following recent tariff threats from President Donald Trump.

“The objective is not to cut China off from technology forever,” Tordoir said in an interview. “The objective is to show that Germany has teeth, to remind Beijing that China also has critical dependencies on Europe.”