An escalatory spiral that leads towards Eurasia's 10% 'trade war' scenario, however, would prompt Brussels to deploy escalatory measures, such as "export controls/duties, public procurement curbs, and/or penalties on U.S. services exports" by using the ACI "trade bazooka as a last resort," they concluded.

The European Union and China are preparing to agree a joint declaration on tackling climate change at a summit in Beijing on Thursday, EU diplomats told Reuters.

Von der Leyen told Xi that the EU’s economic ties with China – running at a trade deficit of 300 billion euro (US$350 billion) last year – had reached “an inflection point.”