Cairo: Hani Kamal El-Din
As global tensions intensify due to the economic strategies adopted by the U.S. administration under President Donald Trump, a formidable trade alliance emerges between China and the European Union—supported by India—posing a direct challenge to what has now become a defining feature of global commerce: the US-China trade war. This alliance could mark a turning point in international trade dynamics and disrupt Washington’s ambition to reshape global trade to its advantage.
China and the EU Push for a Strategic Trade Front
During a recent high-level meeting between Chinese President Xi Jinping and Spanish Prime Minister Pedro Sánchez in Beijing, Xi reaffirmed China’s commitment to strengthening its comprehensive strategic partnership with Europe. He emphasized the need to uphold multilateral trade and resist unilateral and protectionist measures. Facing mounting pressure from the US-China trade war, China sees Europe as a natural partner to rebalance global trade and promote a shared vision of economic cooperation.
Experts Warn of a Shift in Global Trade Leadership
According to analysts at the World Economic Forum, the EU is uniquely positioned to lead a response to U.S. tariffs, particularly through deeper collaboration with both India and China. This emerging trilateral alliance has the potential to shift global trade power dynamics and present a united economic front capable of countering Washington’s tariff-centric policies.
Brussels’ Bureaucracy: An Underrated Strength
Andrew Caruana Galizia, head of Europe and Eurasia at the WEF, highlighted that the European Union has a highly efficient bureaucratic structure with the authority to negotiate on behalf of all member states. This enables the EU to respond decisively and effectively to global trade disruptions, without requiring full consensus—a critical edge when countering fast-moving U.S. policies.
Europe’s Dual Strategy: Avoiding Confrontation, Targeting Growth in China
The EU is adopting a measured approach to avoid direct confrontation with the United States while doubling down on exports to China, where the middle class is growing, and consumer demand is rising. This strategy reflects Europe’s broader vision to diversify its trade routes and reduce dependency on the American market—especially as the US-China trade war casts uncertainty over transatlantic commerce.
Moving Production to the U.S.? Not So Fast
Experts warn that relocating production facilities to the U.S. to dodge tariffs may not yield the expected returns. Establishing new manufacturing plants in the United States is expensive, time-consuming, and fraught with political uncertainty. Many businesses are skeptical about making such long-term commitments, especially with the prospect of Trump leaving office in 2028, or even earlier.
Midterm Elections Could Redefine U.S. Trade Policy
There is growing anticipation that the upcoming U.S. midterm elections in 2026 could significantly alter the political landscape, potentially easing Trump’s grip on trade policy. A reshuffled Congress may open the door for more multilateral cooperation and offer international partners greater flexibility in future negotiations.
Europe Faces Potential Losses—but Looks Eastward
The EU faces potential losses of over $236 billion due to reduced access to U.S. markets. This has spurred Brussels to seek alternative opportunities across Asia, particularly in India, through long-term trade planning. A high-level European delegation is expected to visit Beijing in July 2025 to solidify bilateral cooperation and further develop strategic economic partnerships.
Key Industries at Risk: Chemicals, Automobiles, and Engineering
According to Fitch Ratings, the European industries most exposed to U.S. tariffs include chemicals, automobiles, and mechanical engineering. These sectors are already under pressure due to slowing demand in both the U.S. and China, further exacerbated by the ongoing US-China trade war, which continues to shape the outlook of the global economy.
China Mobilizes Its Institutions for an Economic Counteroffensive
In response to rising U.S. tariffs, China has placed its civilian institutions on high alert, cancelling all leave for employees in the ministries of foreign affairs and commerce. Officials have been tasked with expanding diplomatic outreach to form a global anti-tariff coalition. Internally, China has launched a media campaign invoking historical resilience, quoting Mao Zedong: “We will never surrender.”
Limited Progress in Talks with Trump’s Administration
Despite efforts by Chinese officials to reopen dialogue with Trump’s newly reelected administration, Washington has remained firm. U.S. representatives have made it clear that future talks must yield tangible benefits for American interests, leading to a diplomatic stalemate and further complicating trade negotiations.
Xi’s Upcoming Visits to ASEAN Nations Reinforce Regional Strategy
China’s foreign ministry has announced President Xi’s upcoming visits to Vietnam, Malaysia, and Cambodia, as part of a broader effort to strengthen regional ties with ASEAN countries. These moves aim to counterbalance U.S. influence in the Indo-Pacific and expand China’s strategic footprint across Asia.
U.S. Hopes for European Division, While China Seeks Unity
Analysts at American think tanks argue that despite growing cooperation, structural tensions between the EU and China—particularly in the automotive and green energy sectors—may prevent a full-blown alliance. Nonetheless, escalating U.S. pressure could push Europe to deepen its coordination with Beijing and reconfigure its long-term trade strategies.
