Why Europe should put up trade barriers against Chinese goods
Noah Smith
· Noahpinion
· June 06, 2026 at 08:10
· ⏱ 14 min read
| Read on Substack ↗
Summary
Noah Smith argues that Europe should erect trade barriers against Chinese high-tech goods, primarily to protect its nascent defense industry from supply chain vulnerabilities, especially drone components controlled by China. He contends that China's massive industrial subsidies and mercantilist export strategy create an unbalanced trade dynamic that threatens European sovereignty, and that blocking Chinese imports could also nudge China toward a more consumer-friendly economic model.
•OECD estimates that government subsidies explain 60% of China's global market share gains over the past two decades, with Chinese firms receiving three to eight times more support than competitors.
•China's industrial strategy has shifted to an 'industrial policy of everything' — attempting to dominate all layers of production from upstream inputs to services, not just selected sectors.
•China's trade surplus is massive and persistent, meaning it exports goods for IOUs rather than balanced trade — a deviation from classical comparative advantage theory.
•Europe cannot currently manufacture drone components (radio modules, lithium-ion batteries, electric motors, navigation cameras, carbon frames) without relying on Chinese supply chains, creating a critical defense vulnerability.
•China has already demonstrated willingness to use export controls (e.g., rare earths) to throttle other countries' defense industries, and it supports Russia's war against Ukraine, raising the risk of supply cutoff during a European conflict.
•Despite surging exports, China's domestic consumption is weak — motor vehicle consumption is below a decade ago, and industries like solar and EVs are locked in price wars driving bankruptcies, suggesting industrial policy benefits global market share but not Chinese living standards.