The debate about a possible war in the Taiwan Strait often centers on a single question: which countries would be willing to intervene militarily if China tried to seize the island by force? For the United States, Japan, or Australia, it is an unavoidable issue. By contrast, Europe starts from a different position.
The majority of European countries are unlikely to be key military players in a Taiwan conflict, but they do possess a tool with which they could contribute to deterrence without deploying forces in Asia: the economic weight of the European Union.
“The EU has a tool with which it could contribute to deterrence without deploying forces in Asia: its economic weight”
The EU, as a geopolitical actor, has a direct stake in preserving the statu quo in the Taiwan Strait and opposes any unilateral attempt to alter it through force or coercion. Moreover, the debate about whether it should directly back Taiwan in case of conflict has already been raised.
Additionally, there is its own economic interest. The stability of the Strait directly affects European prosperity. Taiwan plays a fundamental role in global semiconductor value chains, and European authorities themselves have highlighted the strategic importance of the Strait for Europe’s trade and economy.
That interest provides room to develop an economic strategy specifically aimed at raising the cost for China to wage war. This is not new ground for Europe, which already has precedents and instruments to draw upon.
In 2021, Lithuania deepened its relations with Taiwan, and companies in the country subsequently began reporting problems with contracts, shipments, and import requests in China. In response, the European Parliament explicitly identified these measures as Chinese economic coercion against Lithuania. The European reaction turned a dispute that might have appeared bilateral—between China and a small state—into a problem for the Union as a whole.
Around that time, the EU was also developing a far-reaching tool: the Anti-Coercion Instrument, adopted by the Council in October 2023 to deter third countries from using trade or investment measures to coerce the EU or its member states in order to influence a sovereign political decision. The mechanism contemplates commercial responses when a third country seeks to condition a sovereign political decision through economic pressure.
That principle could be extended to broader cooperation among partners. China holds an evident advantage when pressuring a small economy: it can concentrate a sizable portion of its economic power on a single country. The dynamic changes if faced not only with Lithuania—or any other similarly sized state—but with a coalition formed by some of the world’s largest economies.
“The relationship changes if facing not only Lithuania—or any other similarly sized state—but with a coalition formed by some of the world’s largest economies”
Europe, the United States, Japan, Australia, Taiwan, and other partners could create mechanisms to distribute the consequences of that coercion. If China were to restrict imports from a country in response to a political decision, the other participants could facilitate alternative markets for affected products and explore other actions such as providing temporary financing, accelerating investments, reducing certain trade barriers, or helping firms reorganize their supply chains.
Such a system could never guarantee that no country lost a single euro by standing up to China. It would also not be designed to isolate the country economically. The EU defines China, at the same time, as a partner, competitor, and systemic rival, and its official policy is to reduce dependencies and critical vulnerabilities where necessary. The European Council has explicitly ruled out decoupling as part of that strategy. So, the aim would be more limited, because it would seek to make it harder for China to isolate other countries one by one.
The consequences of such a mechanism would extend beyond trade disputes and could enter into Beijing’s calculations about Taiwan. A military coalition to defend the island would necessarily be limited. Many European governments might condemn a Chinese invasion without being prepared to send soldiers, planes, or warships to the Pacific. Economic participation requires a considerably lower political threshold.
“Many European governments could condemn a Chinese invasion without being prepared to send soldiers, planes, or warships to the Pacific”
Spain, Germany, France, Italy, and other European nations could participate in different ways. Some might impose financial restrictions; others would help maintain essential supply chains, facilitate alternative markets, provide financing, or coordinate technological controls. Not everyone would bear exactly the same obligations.
bilateral goods trade reached €68.7 billion and the EU was Taiwan’s fourth-largest trading partner. Both sides also conduct a Trade and Investment Dialogue that covers issues related to critical value chains and economic security.
On that basis, a much broader economic deterrence coalition could form—potentially larger than any possible military coalition. Its effect would need to occur precisely before a war. Before ordering any operation against Taiwan, Chinese leaders would have to assess not only the PLA’s ability to seize the island or deter U.S. intervention, but also the downstream economic consequences.
“Before ordering an operation against Taiwan, Chinese leaders would not only have to assess the downstream economic consequences”
If pre-agreed responses were in place, part of those consequences would be more predictable. Beijing would know that even governments that would never fight militarily could respond on the economic front and that punitive actions against individual countries could trigger mutual support mechanisms. Europe would not need to become a Pacific military power to be part of that calculation.
These mechanisms could also operate before any armed conflict, protecting small countries subjected to economic coercion by maintaining, expanding, or adopting other sovereign decisions contrary to Beijing’s preferences.
Lithuania helps illustrate the scale difference. In the face of a small state acting alone, the enormous disparity in economic size gives China an extraordinary advantage. When the EU intervenes, the relationship changes. The European Parliament seized on the China-Lithuania dispute precisely to argue for better instruments to counter economic coercion.
The Union has already recognized, in legal terms, the principle that a third country incurs economic coercion when it uses measures affecting trade or investment to prevent or induce the EU or one of its member states from adopting, modifying, or withdrawing a certain decision. The proposal would extend the capacity to respond beyond Europe’s borders by cooperating with other partners.
The European policy in a Taiwan crisis is not simply a matter of staying on the sidelines or sending forces to the far side of the world. There is room between those positions to use a capability the EU already possesses.
China’s integration into the global economy gives it influence, but it also means that a confrontation with a sufficiently broad coalition would entail enormous costs for its own economy. Europe can help ensure those costs are more predictable.
The EU has reiterated that peace and stability in the Taiwan Strait are strategically important for regional and global security and prosperity, and that it has a direct stake in preserving the statu quo. If it genuinely believes that stability serves its interests, its contribution need not be measured solely by the number of ships it might send to Asia. It can also be measured by the economic cost China would have to bear if it decided to attack Taiwan.
Europe may never join the core military shield of Taiwan, but it can contribute to building its economic shield.
