As China-U.S. tensions escalate – from tariffs to tech restrictions – Europe finds itself navigating and increasingly entangled in a rivalry that tests both its economic pragmatism and geopolitical alignment. The European Union must confront a hard truth: the evolving policies of both Washington and Beijing raise questions about their reliability as enduring strategic partners. In this context, efforts to deepen ties with China in the hope of counterbalancing U.S. predictability may ultimately backfire, undermining Europe’s strategic autonomy and deepening transatlantic rifts.
The Trump administration’s proposed 50 percent tariff on European imports, though never enacted, underscored the EU’s vulnerability within the broader China-U.S. rivalry. This fragility is compounded by the EU’s $324.3 billion trade deficit with China in 2024, with the EU importing more chemicals, machinery and vehicles, energy, and manufactured goods than it sells to China. This way, China’s targeted procurement strategy enables it to exert influence over internal EU debates, widening divisions within Europe and across the Atlantic.
Further complicating the picture is the lack of a cohesive EU strategy on matters where the bloc can exert leverage. One example is the fragmented enforcement of strategic trade laws. While the United States has aggressively implemented the Uyghur Forced Labor Prevention Act (UFLPA), blocking imports from 144 Chinese companies, many of these goods continue flowing into Europe unchecked. Although the EU has since introduced its own forced labor legislation, years of regulatory leniency have undermined collective efforts and handed Chinese firms a backdoor into global supply chains – at the cost of shared values and strategic coherence.
Energy policy tells a similar story. Despite U.S. leadership in supporting Ukraine and sanctioning Russia, European dependence on Russian energy has remained stubbornly high. France, for example, became Europe’s top importer of Russian liquefied gas in 2024, and Germany continues to access Russian supplies via third-country ports. These actions not only dilute Western pressure on Moscow, but also embolden deeper China-Russia economic coordination. The renminbi has a growing role as a primary settlement currency in Sino-Russian trade – often at odds with U.S. and EU interests.
Amid these divergences, China has proven adept at leveraging commercial incentives for political influence. When Germany’s then-Chancellor Olaf Scholz visited Beijing in 2022, he secured a $17 billion deal for 140 Airbus aircraft, echoing earlier unfulfilled commitments China has made to the U.S. under the Trump administration of 300 Boeing aircraft worth $37 billion, which did not materialize. These symbolic purchases underscore how Beijing uses economic diplomacy to exploit divisions between transatlantic allies and delay unified policy responses.
But China’s strategic prowess is not merely in its ability to sway foreign policy through economic means. China’s economic approach is structural, long-term, and state-led. Sectors like electric vehicles reveal how Beijing blends subsidies, technology transfer, and economies of scale to dominate global markets. BYD, once a Tesla supplier, has now surpassed Tesla in global EV sales.
This comes at a human cost, however, as evidenced by recent legal action in Brazil over alleged “slave-like” practices at a BYD facility. China’s model of state-led economic expansion often overlooks human rights standards, creating cost advantages that contribute to its global market dominance. This extends beyond industrial competition; it is a strategic campaign to reshape global supply chains on Chinese terms.
Europe’s differences with China thus run deeper than negotiations around market access and burden-sharing. The gap is rooted in different political systems, ideologies, and strategic visions. China has exploited these systemic differences to expand its global leverage, and the United States is playing catch-up. Europe would do well to study the strategic missteps of China-U.S. relations and avoid repeating them, while also balancing the global human rights standards that its citizens expect and uphold.
Meanwhile, U.S. domestic instability and deindustrialization have further weakened its position on the global stage. The loss of a quarter of U.S. manufacturing jobs between 2000 and 2024 has fueled political volatility, culminating in erratic foreign policy swings that leave allies guessing and hurting working class families. Against this backdrop, China is actively courting the EU, reviving the stalled Comprehensive Agreement on Investment (CAI), and lifting sanctions on EU officials. The EU has been receptive, notably in accommodating the recent decision to host the 2025 EU-China Summit in Beijing, breaking with the tradition of alternating venues.
These moves suggest Europe is drifting toward accommodation with Beijing, rather than alignment with Washington. But relying on China for growth or the United States for security without a cohesive strategy of the EU’s own is a formula for strategic paralysis.
The recent ASEAN-China-GCC Summit further underscored Beijing’s progress in building non-Western economic coalitions. China used the platform to expand cross-border payments in local currencies and accelerate Belt and Road infrastructure connectivity across Asia and the Gulf. Against this backdrop, a stronger and more coordinated transatlantic relationship is becoming essential to maintaining global stability and order.
To avoid becoming a pawn in this long game, the EU must commit to a more assertive posture. This requires a trade security doctrine, one that conditions market access on enforceable standards for democracy, labor rights, and strategic reciprocity. Only by embedding values into its economic relationships can Europe begin to reclaim agency in a multipolar world.
Europe’s moment of strategic clarity is due. The game has been set and the players have taken turns. It is now Europe’s move.