Initially, President Trump's policies appeared to create an opportunity for Europe and China to strengthen their economic ties. His proposed tariffs blurred the lines between the European Union, a traditional ally of the United States, and China, a key competitor to American dominance.
However, the situation has evolved differently, placing the European Union in a precarious position between the two largest global economies.
In Brussels, officials are working to negotiate a trade agreement with the United States before potential high tariffs are imposed by Trump, which could severely impact the EU's economy. Concurrently, EU policymakers are urging China to cease its support for Russia, reduce state subsidies to Chinese industries, and limit the influx of inexpensive goods into the European market.
Despite the challenges, the EU recognizes the importance of maintaining a stable relationship with China, the leading manufacturing power. A summit in Beijing is scheduled for late July, although expectations for productive outcomes are low. While China suggests that Trump's trade policies are pushing Europe closer to it, tensions between the EU and China are escalating.
During a recent visit by China's foreign minister to Brussels, both sides presented differing views on their relationship, with China claiming progress while EU officials highlighted ongoing trade imbalances.
The EU has recently taken steps to limit government spending on medical devices from China, citing unfair treatment of European companies. In response, China announced retaliatory measures.
Despite these tensions, the EU's economic ties with China remain significant, with many European nations relying on China for industrial materials and maintaining substantial exports, particularly from Germany. However, European exports are declining as imports from China rise, prompting EU policymakers to impose stricter regulations on low-cost imports.
Additionally, the EU is frustrated with China's support for Russia amid the ongoing conflict in Ukraine, which undermines European sanctions.
Danish Foreign Minister Lars Løkke Rasmussen emphasized that the EU's goal is not to sever ties with China but to engage on a more equitable basis. As the U.S. alters the global trading landscape, the EU, comprising 27 nations and the world's third-largest economy, seeks to uphold free trade principles.
Ursula von der Leyen, the president of the EU's executive branch, has indicated that the EU is deepening trade relationships with like-minded countries and may explore new collaborations with a group of 11 nations, excluding the U.S. and China.
Despite these initiatives, EU officials find themselves in a defensive position, caught between U.S. and Chinese policies. Regardless of the outcome of trade discussions with the Trump administration, the EU is likely to face higher tariffs on exports to the U.S. and may need to make concessions, including adopting a tougher stance on China.
While the EU acknowledges China's unfair trading practices, its economic interdependence limits how far it can push back. China recently reminded the EU of this reality by restricting global exports of rare earth magnets, essential for various industries, affecting both American and European companies.
European firms have experienced delays in obtaining rare earth materials from China, which has been exacerbated by longstanding trade issues, including China's requirement for foreign companies to share technology to access its market.
In response, EU officials have been advocating for technology transfer from Chinese companies as a condition for market access in Europe. The EU has also joined the U.S. in restricting high-tech exports to China, which has drawn criticism from Chinese officials.
At the upcoming Beijing summit, European officials are expected to continue pressing for more reliable access to rare earths and to address the challenges foreign companies face in China. However, the prospects for significant progress or a closer EU-China relationship appear bleak, with European leaders expressing concerns about China's approach to trade and diplomacy.