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Europe recalibrates ties with China amid Trump’s escalating tariff war

Published: 16 Apr. 2025, 00:03

An Pyeong-eok

The author is a professor of international relations at Daegu University.

The tariff war waged by U.S. President Donald Trump is not merely about trade barriers. It is part of a broader strategy to weaken the overvalued dollar and revive domestic manufacturing. As the world’s largest economy recalibrates its global trade policies, the responses from China and the European Union — the second- and third-largest economies — have begun to reshape international alignments.

Both have expressed concern over the global ramifications of Trump’s protectionist stance, pledging to cooperate to prevent further instability. Ironically, the trade war is nudging Europe back toward China, reversing recent efforts to distance itself from overreliance on the Chinese economy.

Despite years of deficit, Europe remains economically entangled with China. Last year, the EU recorded a trade deficit of 304.5 billion euros ($345.5 billion) with China — virtually unchanged from the year before — while it enjoyed a 235.6 billion euro surplus with the United States. That imbalance underscores how Europe’s trade with the U.S. is offsetting persistent losses in its dealings with Beijing.

European Commission President Ursula von der Leyen, left, and European Commission Vice-President and High Representative of the European Union for Foreign Affairs and Security Policy Kaja Kallas attend the EU conference on Syria in Brussels on March 17. [EPA/YONHAP]

On April 9, the day Trump announced a 125 percent tariff hike on Chinese goods, European Commission President Ursula von der Leyen held an extended phone call with Chinese Premier Li Qiang. Representing the EU’s executive branch, the Commission crafts and enforces trade policy on behalf of its 27 member states.

The two leaders agreed to work together to ensure global economic stability and predictability. They also discussed setting up a mechanism to monitor and manage the anticipated influx of Chinese exports into Europe as U.S. access narrows. Both parties affirmed their commitment to maintaining the global free trade regime. Notably, neither has imposed new tariffs on each other, and their trade policies toward third parties remain steady.

Nevertheless, the EU has sought to address its chronic trade deficit with China. Last October, it imposed tariffs of up to 45.3 percent on Chinese EVs, citing unfair state subsidies. Yet with Trump’s renewed tariff aggression, the EU is now reconsidering those duties and actively courting Chinese investment — particularly in high-tech sectors such as EV batteries.

Chinese battery giant CATL, which holds key patents in secondary battery technologies, is being encouraged to transfer intellectual property to European markets in exchange for investment opportunities. As Europe pushes to expand its EV infrastructure, collaboration with Chinese firms becomes increasingly necessary.

This year also marks the 50th anniversary of diplomatic normalization between the EU and China. Brussels is reportedly considering an invitation to President Xi Jinping in a bid to project a more assertive European stance against U.S. protectionism. The two sides may also find common ground in postwar reconstruction efforts in Ukraine. China has already approached the Ukrainian government about participating in future rebuilding initiatives, while the EU has committed over $100 billion in military and economic aid and begun formal accession talks with Kyiv.

However, deepening economic ties with China could undermine the EU’s image as a normative power. Yet for Europe, which faces tepid growth and relies heavily on external markets, prioritizing trade has become essential. ING recently downgraded its eurozone growth forecast for this year from 0.7 to 0.6 percent, and next year’s projection fell from 1 to 0.6 percent — further evidence that tariff tensions are dragging down Europe’s economic outlook.

Visitors check out the BYD Atto 3 at the IAA motor show in Munich on Sept. 8, 2023. The European Union has launched an investigation into Beijing’s support for its EV industry, adding to tensions between the West and China. [AP/YONHAP]

European economies are far more trade-dependent than the United States. In 2023, Germany’s trade-to-GDP ratio reached 83 percent, while France’s was 71 percent. The United States, by contrast, stood at just 25 percent. Over the past several decades, the EU has increased its share in global merchandise trade, reaching 25.7 percent last year — outpacing both China at 18 percent and the United States at 12.4 percent.

Given these dynamics, EU member states are left with few alternatives but to expand trade ties, including with China. This limits the bloc’s willingness to openly criticize Beijing on human rights issues in regions like Xinjiang or Hong Kong.

Structural factors also play a role. While trade policy falls under the jurisdiction of the European Commission and can be pursued collectively, foreign and security policy decisions require unanimous consent among member states. This has led to divergent approaches. Germany and France favor engagement, while the Baltic states maintain a more hawkish posture toward China.

French President Emmanuel Macron, center right, and European Commission President Ursula von de Leyen, center left, arrive for a working session with Chinese President Xi Jinping in Beijing, on April 6, 2023. [AP/YONHAP]

Two years ago, the EU embraced a "de-risking" approach, aiming to reduce excessive dependence on China without severing ties altogether. The bloc passed a Critical Raw Materials Act to diversify import sources and reduce vulnerabilities in key sectors. But Trump’s latest tariff escalation has pushed Europe to consider a new direction—re-coupling with Beijing.

As the EU navigates this shifting landscape, it must strike a delicate balance between enhancing economic gains and preserving its standing as a principled global actor. That task may define the next phase of Europe’s relationship with China.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.