The first months of US President Donald Trump’s second administration have unfolded like a horror movie for Europe. Just when it looks like the massacre might be over, the orange-tinted villain and his zombie minions rise up again and wreak more havoc.
In the span of a few weeks, Trump and his team have shown they are prepared to throw Ukraine under the bus and, in the words of Trump’s Secretary of State Marco Rubio, embrace the “incredible opportunities” offered by Vladimir Putin’s Russia. They have intervened on behalf of far-right parties in European elections, threatened to take Greenland by force, and hit Europe (and other allies) with tariffs.
In mid-March Trump threatened to impose 200 percent duties on European wine, spirits and champagne because the European Union had the temerity to respond to his coercive trade policies. Many European governments are now convinced that Trump is out to destroy the EU, a project he falsely claims was created to “screw” the United States.
The transatlantic rupture has been sudden, deep, and is likely to be lasting. It is forcing Europe to rethink its strategic and economic priorities and reassess its global relationships, including with that other superpower, China. As Europe leans away from Washington, the temptation will be to lean toward Beijing. And there are already signs that some in Europe are considering this.
Deepening Links?
European Commission President Ursula von der Leyen has spoken in recent months of deepening trade and investment ties with China, a departure from the hawkish message of her first term. Some EU member states, including Spain and Italy, have begun pushing back against criticism of Beijing as they pursue Chinese investments.
EU trade officials say they plan to explore the scope for a positive agenda with Beijing when they pay their Chinese counterparts a visit in late March. There are also murmurs that Brussels and Beijing are looking for ways to de-escalate their four-year-old sanctions standoff. In February, the European Parliament quietly removed guidelines for its members that restricted engagement with Chinese counterparts over the sanctions Beijing slapped on numerous parliamentarians back in 2021.
The instinct to reduce tensions with Beijing is understandable. No one in Europe wants to get bogged down in a two-front trade war with the world’s superpowers. But the sudden collapse of the transatlantic relationship has not made the problems in Europe’s relationship with China any smaller. And it would be disastrous if Europe, in a push to reduce its dependence on the United States, ended up increasing its reliance on China in the process.
Concerns Remain
European concerns about China fall into two main categories. First, there is the threat that cheap, subsidized Chinese products could flood into the European market, decimating home-grown industries from cars and wind to steel and chemicals. This threat has only grown since the US began ratcheting up tariffs on China.
The second is China’s role, in the words of NATO leaders, as a “decisive enabler” of Russia’s war in Ukraine. This threat may have been obscured somewhat by Trump’s push for a ceasefire deal with Putin. But it has not gone away. And there is a risk that Chinese support for Russia will become a more acute problem for Europe in a world where Putin feels emboldened by an American president who doesn’t believe in NATO.
Until Beijing addresses these core European concerns, no one in Europe should be under the illusion that China can become an alternative to the US. Instead, European countries should be guided by the following principles as they chart a way forward in an increasingly hazardous geopolitical landscape.
Three Principles
First, European de-risking from China, which remains piecemeal and incomplete, must move forward and be broadened to encompass the United States. This does not mean that Europe can or should attempt to decouple from the world’s two biggest economies. Nor should China and the US be put in the same basket when it comes to de-risking.
Europe’s dependencies on China revolve primarily around critical minerals and climate-related technologies. Those with the US are mainly in the defense and digital spheres. Reducing these dependencies is a complex, long-term challenge. It will require ruthless prioritization at the European level, a deeper dialogue between governments and industry, and coordinated, top-down implementation at the national level. In some cases, it will make sense to maintain close industrial links—for example to China in electric vehicle batteries or the US in defense sectors where European replacements are not readily available—while introducing new guardrails or conditions around this cooperation. In a world where both Beijing and Washington are hostile competitors or even adversaries, a more comprehensive approach to de-risking will be needed.
Second, Europe will have to make more aggressive use of industrial policy, trade tools, and economic security standards to protect and promote its own companies. This is the flip side of the de-risking coin. Without strong home-grown alternatives it will be impossible to reduce Europe’s dependencies on China and the United States. The widespread use of Chinese telecommunications group Huawei as a supplier for European 5G networks, when the continent had its own champions in Ericsson and Nokia, is a black mark for European industrial policy and a lesson for the future. Going forward, Europe will need to be less shy about favoring its own firms, as China and increasingly the US are doing. This will require a more flexible approach when it comes to both World Trade Organization (WTO) and EU fiscal rules.
The good news is that this is already happening. With its Competitiveness Compass, Clean Industrial Deal, and Industrial Action Plan for the automotive sector, the European Commission has laid out a blueprint for a “Europe First” economic agenda in which home-grown companies and EU-based production are prioritized. But to succeed, it will need the support of EU member states, which have the power to decide which foreign investments they accept and under what conditions.
Europe is also in the midst of a fiscal revolution. Germany is jettisoning years of fiscal discipline in a debt-fueled rush to remilitarize and revamp creaking infrastructure. This is opening the door to deficit spending on defense across the EU. As Sander Tordoir of the Centre for European Reform pointed out in a recent piece in Foreign Policy, Europe has both the industrial base and the wealth to rearm rapidly and regain the economic momentum it lost in recent years as Chinese competition increased, energy prices rose, and trade barriers multiplied. This puts Europe in a favorable position compared to the United States, which has a smaller manufacturing sector, is in the process of closing down to Chinese technology, and has only just begun the painstaking process of industrial reshoring.
Third, while continuing to pursue dialogue with the US and China, Europe should double down on its cooperation with democratic countries like the United Kingdom, Canada, Japan, and South Korea, which find themselves in the same tough geopolitical position. Cooperation on China at the G7 and transatlantic level, which flourished under former US President Joe Biden, is likely to crumble under Trump as Washington consults less with allies and coerces them more. This will make policy coordination among a group of G6+ countries all the more important. European policymakers must not allow transatlantic turmoil to distract them from the slow-burn challenges posed by China.
The world has become far more complicated since the return of Donald Trump. Europe needs to prepare for a prolonged period of tensions with the US as well as China. But it has some cards to play if it sticks together and works with like-minded partners. Even horror movies can have a happy ending.
This article is a preview from our IPQ Spring 2025 issue "The China Factor," out on March 27.
Noah Barkin is a senior adviser with Rhodium Group’s China practice and senior visiting fellow in the German Marshall Fund’s Indo-Pacific program.
