A coordinated G7 move toward higher tariffs on Chinese goods would represent a significant escalation in the global trade war, with direct implications for supply chains in EVs, batteries, solar and advanced machinery. European equities with China exposure, particularly German industrials and automakers already under pressure from Chinese competition, face added downside risk if Brussels moves to broaden its tariff regime beyond current sector-specific measures. Chinese export-oriented sectors and yuan-sensitive assets could reprice on any firm summit communique. The prospect of a China-EU trade dispute layered onto existing US-China tensions introduces fresh uncertainty for commodity demand, given China's role as the world's largest buyer of industrial inputs.---G7 leaders meeting in France are considering higher tariffs on Chinese imports as Beijing's record $1.2 trillion trade surplus redirects export pressure toward Europe, the AP reported. Summary:Source: Associated PressG7 leaders gathering in Évian-les-Bains, France have placed China's trade practices near the top of the agenda, with French officials seeking a coordinated plan to address the threat from Chinese exportsChina posted a record global trade surplus of $1.2 trillion last year despite sustained US tariffs, redirecting exports toward Europe and other open marketsChinese exports to the 27-nation EU rose 16.4% in the January-to-May period from a year earlier, deepening trade deficits across the blocThe EU currently imposes relatively low baseline tariffs on Chinese goods under WTO rules, with higher sector-specific duties including up to 35% on electric vehiclesChina now competes directly with nearly 58% of eurozone exports, up from 46% in 2000, with Chinese firms expanding from low-cost manufacturing into EVs, advanced machinery and scientific instrumentsGermany has been among the hardest hit, with its economy shrinking in 2023 and 2024 and growing just 0.2% last year, partly due to Chinese competition in its core export industriesLeaders of the world's seven largest economies are weighing higher tariffs on Chinese goods as Beijing's surging exports increasingly threaten European industry, with France pushing for a coordinated response to emerge from the G7 summit in Évian-les-Bains this week.The push reflects growing alarm in Europe at what analysts have labelled China Shock 2.0, a second wave of disruption from Chinese manufacturing that is more consequential than the first. China now accounts for 16% of global goods exports, up from just 4% in 2000, and its product mix has shifted dramatically upmarket. Where the first China Shock in the early 2000s centred on low-cost textiles and electronics, the current wave encompasses electric vehicles, batteries, advanced machinery, robotics and scientific instruments, putting Chinese firms in direct competition with the industrial core of the world's richest economies.China recorded a record trade surplus of $1.2 trillion last year, even as US tariffs cut Chinese goods exports to America by 37% in the first four months of this year. The shortfall has been redirected elsewhere, with exports to the EU climbing 16.4% in the January-to-May period. France's trade deficit with China widened from $3.3 billion to $5.3 billion over a year, and Germany, once a major beneficiary of Chinese demand for its cars and machinery, now buys more from China than it sells. The German economy contracted in both 2023 and 2024 and grew only marginally last year.The EU currently applies relatively low baseline tariffs on Chinese goods under World Trade Organization rules, though it has imposed sector-specific duties of up to 35% on electric vehicles. French officials have indicated they want the summit to produce a plan that goes further, potentially including a broader tariff wall aligned more closely with the approach the United States has taken over the past eight years.Economists warn that China's domestic policies, including cheap state credit for manufacturers and a weak social safety net that encourages household saving over spending, structurally incentivise overproduction and export dependence. Without a change in that model, analysts say, the pressure on European industry will continue to build regardless of what individual governments do at the margin. The G7 summit may prove to be the moment Europe decides it has waited long enough to act. This article was written by Eamonn Sheridan at investinglive.com.