China's Ministry of Commerce warned of retaliation if the European Union implements new trade restrictions on Chinese imports, a Ministry of Commerce official said. The stark threat follows EU scrutiny over alleged Chinese overcapacity in key sectors. This public warning signals a sharp deterioration in bilateral trade relations.

Spokesman He Yadong fired back rhetorically, asking if the EU itself lacks overcapacity in automobiles, pharmaceuticals, wine, and cosmetics. His comments at a Beijing briefing directly challenge the EU's justification for tougher curbs, framing the issue as hypocritical and politically motivated.

Markets now face rising uncertainty as two major economies exchange threats. Investors are weighing potential disruptions to supply chains and export flows. The standoff could derail fragile post-pandemic recovery efforts and inject fresh volatility into global trade policy.