March 2nd, 2026

USCSSO @GWU
1 day ago
5 min read

Overview

This week, we discuss tensions over Japanese missiles, EV relationships between the EU & China, and the state visit of Germany's chancellor to Beijing.

Defense

China, Taiwan, and a More Aggressive Japan

By Contributor Allie Maury

Last week, Japan announced that missile deployments to a small island 70 miles from Taiwan will be complete by March 2031.

This handout photo taken on June 24, 2025 and received from the Japan Ground Self-Defense Force on June 25, 2025 shows a single 'Type-88' missile being tested [Japan Ground Self-Defense Force/AFP] (via Al Jazeera)

Missile Deployments: Last week, Japan announced their intentions to establish missile capabilities on Yonaguni, a small island around 70 miles from Taiwan, by March 2030. These medium-range deployments will be capable of shooting down aircraft and ballistic missiles. In response, Beijing has dispatched naval vessels and increased economic pressure on Japan through tighter control on rare earth mineral exports and scaling back cultural exchanges. Beijing has yet to officially react to the announcement.

Background: Japan has strengthened its military structure in the area over the past few years. In November, Japanese Prime Minister Sanae Takaichi said that an invasion of Taiwan would warrant a military response from Tokyo. Beijing, which still hasn’t ruled out the use of force when annexing Taiwan, blasted these comments in November, saying that they stoked regional tensions and military confrontation. Takaichi refused to walk back the comments and, after winning a snap election, rewrote the part of the Japanese constitution that abolished its right to a full military. Her comments and actions indicate a departure from 80 years of Japanese ambiguity over Taiwan.

Timing, Reasoning, and Implications: These actions are the latest step in a long-term process of re-interpreting the meaning of Japanese self-defense. Tokyo is likely taking these steps now because they don’t want the window of opportunity to close; China is growing more capable and Japan might not get this opportunity later. It also puts Takaichi in a better position with the Japanese right-wing and with President Trump, who has repeatedly called for allies to increase defense spending, ahead of her visit to the White House in March. China claims Yonaguni as part of its pre-war territory. So, tensions over the island will likely grow as the project develops. Ultimately, a more assertive Japan will likely lead to increased tensions with China in the future.

Economics

EU-EV Tariffs: Effective or Not?

By Contributor Praful Chennupati

Many EU companies have struggled with competition from China in the automotive market, specifically Electric Vehicles (EVs).

Volkswagen's electric ID. 3 car being displayed on media tour in Dresden, Germany. May 2025.. (via. Reuters)

Tariffs: European nations and businesses are struggling to adapt to China’s recent arrival in the car industry, backed by significant subsidies from the Chinese government. Chinese dominance in the electric vehicle industry has pushed the European Union to implement tariffs between 17-35% to encourage Chinese firms to produce vehicles inside of Europe. However, this plan hasn’t worked quite as intended. The tariffs covered electric vehicles and battery cells, but left exceptions for hybrid vehicles. Due to this, Chinese carmakers have surged exports of plug-in hybrids(PHEVs) as well as internal combustion engine cars. These vehicles only have to follow the base 10% import duty. For the time being at least, Chinese manufacturing in the EU continues to be uncommon.

Exceptions: The alternative model of the EU’s policies is the option for a negotiated price floor. On January 12, 2026, the EU released a document containing guidelines on how Chinese firms can apply to price their vehicles according to an appropriate price floor as opposed to blanket tariffs. Under such a condition, these carmakers would only have to pay the base import duty of 10%.

The consequences of the tariffs have remained minimal, yet important regardless. Volkswagen, in early February acquired an exemption from the EU’s tariffs for its Chinese-made Cupra Tascavan model, opening the door for other European carmakers to pursue such exemptions. In fact, BMW is currently seeking such an exemption for its China-made Mini Cooper vehicles.

Struggle: The significant manufacturing overcapacity of Chinese firms, where vertically integrated supply chains have allowed OEMs(Original Equipment Manufacturers) to significantly reduce costs,. This has allowed these carmakers to continue business as usual with thinner margins. However, European manufacturing costs are much higher, making the tariffs in some ways more effective against the EU’s own firms, some of which rely on Chinese parts. This is especially important to consider with regards to critical components that aren’t produced at all in the EU, such as batteries. Current EU battery production is effectively nonexistent due to factors such as a lack of priority grid access and weaker supply chains.

Diplomacy

Germany’s Merz & China's Xi: Reliable Partners or Systemic Rivals?

By Newsletter Director Jason Holman

On Feb. 25th German Chancellor Friedrich Merz began a 2 day state visit to China, visiting Beijing and Hangzhou.

German Chancellor Friedrich Merz visiting Beijing and talking with Chinese Premier Li Qiang. (via. The New York Times)

State-Visit: On Feb. 25th German Chancellor Friedrich Merz, along with several top German companies, began a two day visit to China. Merz met with Premier Li Qiang and President Xi Jinping in Beijing, before visiting Simen’s Energy & Unitree in Hangzhou. This visit comes after several world leaders have made visits to China in the past few months. Merz’s tone was seen as firmer than previous leaders' visits to China, with a focus placed on German economic concerns, as well as concerns over the war in Ukraine. The visit was seen as successful on both sides with Xi pledging to purchase 120 aircrafts from the European company Airbus and putting plans forward for several future deals.

Competition & Rivalry: Chancellor Merz’s concerns in China were largely focused on trade, which has been the main source of tension between Beijing and Berlin. Germany’s trade deficit with China hit $105 billion in 2025, after German exports to China fell 9.7% and imports from China rose 8.8%. There has also been concern over German companies facing increased competition from China. Specifically the German automotive industry has felt threatened by China leading to the EU placing large tariffs on Chinese EVs in 2024. These concerns led to Merz demanding for China to reduce subsidies for Chinese exports, allow the value of the renminbi to rise, and allow continued export of crucial critical minerals. There were also attempts to discuss Ukraine, with Merz encouraging Xi to put pressure on Putin to end the war in Ukraine.

#Two & Three: There were also steps toward strengthening the mutual bond between China and Germany. China placed a large emphasis on Germany and China being the 2nd and 3rd largest economies and that it was in their best interests to pursue cooperative strategies. China seeks to increase cooperation on tech and to share development opportunities with Germany. The inclusion of German businesses as well as the visit to Hangzhou reflected this increased cooperation between the two countries. To cement future cooperation Merz also encouraged Economic Minister Katherina Reichs to visit China.