Germany shifts from free-trade to protectionism after tool-maker sector hit by Chinese competition

After extensive negotiations, Paris and Berlin signed two agreements on 5 and 15 October 2026 to coordinate EU protection against what officials describe as unfair Chinese commercial practices. The pacts mark a break from Germany’s long-standing free-trade doctrine, driven by a sharp decline in export market share for its core industries—automobiles, chemicals and mechanical engineering. The machine-tool sector, once a global leader, saw the most dramatic reversal, with Chinese firms producing equivalent high-tech machines at about half the cost, aided by state subsidies and economies of scale.

Oliver Richtberg, the VDMA’s foreign-trade spokesperson, recalled that German companies previously assumed occasional copying would not endanger them, a view that collapsed after engineers witnessed rapid Chinese progress during post-pandemic visits. The new Franco-German alignment now seeks tighter EU economic protection measures.