Is Trump's Tariff Push Catalyzing Global Trade Realignment? China, EU Recalibrate Ties

Trump has fueled deep concerns in Brussels and Beijing that Washington is ushering in a new global order

Source: Euronews

The European Union (EU) and China have moved to improve bilateral ties this year, spurred by President Donald Trump’s aggressive tariff regime.

The two economies have expressed optimism about bilateral relations, exchanging diplomatic notes and visits highlighting warm EU-China ties. Coinciding with the 50th anniversary of diplomatic relations, senior EU officials stressed shared values with Beijing.

“The spectre of Trump 2.0 has cast a long shadow over transatlantic ties,” the Italian Institute for International Political Studies wrote on Monday. “Yet, it is that very pressure which appears to be nudging the EU and China toward cautious rapprochement as they celebrate 50 years of diplomatic ties.”

Trump has fueled deep concerns in Brussels and Beijing that Washington is ushering in a new global order. The Europeans and the Chinese are alarmed by Trump’s reciprocal tariff push as both struggle with lackluster economic growth and the impact it will have on global trade.

The anniversary “takes place at a moment of global uncertainty and geopolitical changes,” European Commission (EC) President Ursula von der Leyen and European Council President Antonio Costa said in a letter to China’s President Xi Jinping and Prime Minister Li Qian.

These challenges underlie “our shared responsibility in defending all the principles enshrined in the Charter of the United Nations,” they wrote. President Xi said the anniversary would “open up a brighter future for China-EU relations.”

Trump Aims Tariffs at EU, China After Return to White House

Brussels and Beijing have pushed to recalibrate their relationship amid increasing frustration with Washington after Trump returned to the White House. China sees this as a strategic opportunity to weaken EU-US ties in its favor.

“With rising European animosity against the United States, China has seen an opening to cooperate with the EU to counter the United States,” Council on Foreign Relations’ (CFR) Research Associate, Turner Ruggi, wrote on May 1. “Even before 'Liberation Day,' China-Europe relations were improving.”

The 47th president has targeted both with steep tariffs, imposing 145% on Chinese products and 20% reciprocal tariffs on €380 billion worth of EU exports to the US during his April 2 “Liberation Day” speech.

Since then, the EU and China have negotiated with the Trump administration a 90-day pause in the full enforcement of the tariffs. For Europe, tariffs have declined to the 10% baseline rate, and for China, they have declined to 30%.

Trump said Monday that the EU is worse than China, hours after Washington and Beijing agreed to slash respective punitive tariffs and de-escalate their trade war. The EU “is in many ways nastier than China, okay?" Trump said.

"Oh, they'll come down a lot,” he said. “You watch. We have all the cards. They treat us very unfairly."

EU Trade Commissioner Visits China for Trade, Investment Talks

EU Trade Commissioner Maros Sefcovic visited China in March, where he met with the country’s Vice Premier He Lifeng, Minister of Commerce Wang Wengato, and Customs Minister Sun Meijung.

The trip’s stated purpose was to improve China-EU trade and investment relations, likely in anticipation of Trump’s tariffs, according to CFR.

“The current trade situation with the United States, our most significant partner, is in a tough spot,” Sefcovic said in remarks on April 7. The visit to Beijing aimed to foster “cooperation to rebalance our trade and investment relationship with tangible results, he said.

The bilateral talks focused on longstanding issues, “like overcapacity and subsidies,” market access barriers for many European products, and the “need to level the playing field for EU companies in China,” he said.

The two sides also discussed Chinese investments in the EU electric vehicle supply chain

to boost competitiveness and jobs in the EU. Talks focused “on technology transfer, R&D, and local sourcing of key components and the value generated here,” Sefcovic said.

EU Diverges from De-Risk Policy toward Beijing

The push to improve ties with China represents a significant shift from the EU’s previous position.

The EU adopted definitive tariffs of up to 45% in October on China-made battery electric vehicles (BEVs). The EU has accused Chinese EV makers BYD (OTCPK: BYDDF), Geely (OTCPK: GELYF), and SAIC of benefiting from substantial state support. This includes preferential financing, grants, and below-market-price resources like batteries and land.

“The decision to impose tariffs on Chinese EVs reflects a growing skepticism throughout the EU of China’s non-market practices,” Center for Strategic & International Studies’ Research Associate Ryan Featherston wrote in December. “These concerns also come in the context of a growing movement to not only preserve the EU’s industrial base but also expand it to include the green industries of the future.”

In March 2023, von der Leyen called for “de-risking” rather than “de-coupling” to reduce dependency on China. The Chinese government denounced the EU’s de-risking, labeling it “confrontational” and “politically motivated.”

“We have to recognise that the world and China have changed significantly,” von der Leyen said, China’s “escalatory actions” have “become “more repressive at home and more assertive abroad…This is why we need to focus on de-risk – not de-couple.”

De-Risking from China Hindered by Extensive Trade Ties

De-risking from China has proven difficult given the extensive trade ties.

In 2024, China was the third largest partner for EU exports of goods (8.3%) and the most significant partner for EU imports of goods (21.3%). The EU sourced 46% of its 12,900 tons of rare earth imports from China.

China is also an important market for European luxury companies. Burberry, Hugo Boss, and Swatch Group depend on Chinese customers to drive revenue growth.

Last year, they started to feel the pinch of China’s economic weakness. Swatch Group, the world's biggest watchmaker, reported a 12% decline in net sales and a 75% drop in net income due to a “persistently difficult market situation and weak demand for consumer goods overall in China.”

EU, China Differ on Most Geopolitical, Climate Policies

Despite the EU-China push to improve economic and political ties, the two countries' policy orientations differ significantly. European capitals and Beijing differ significantly on the war in Ukraine, with China backing Russia, instability in the Middle East, and climate change.

While the EU pushes for its green transition, China is rapidly building coal and nuclear plants to meet its energy needs. China is the world’s fastest-expanding nuclear power producer, with 23 reactors under construction as of 2023, totaling 21–24 GW of capacity.

The EU and China are also competing for raw materials in Central Asia. China is chipping away at EU influence by investing heavily in the region as part of its Belt and Road Initiative (BRI). It has poured vast funding into infrastructure projects, surveillance systems, and military assistance.

"The more aggressive posture and unfair economic competition from China, its 'no-limits' friendship with Russia – and the dynamics of its relationship with Europe – reflect a shift from cooperation to competition," von der Leyen wrote in July. “We have seen first-hand the dangers” of China’s “monopoly on raw materials essential for batteries or chips.”