Wedged between Washington and Beijing, Europe seeks a way forward

This article is part of our special report 50 Years of EU-China Relations: the future of the strategic partnership.

Washington hailed the outcome of its latest negotiations with Beijing as a “great China deal”, signalling at least a temporary thaw in bilateral tensions. Meanwhile, European leaders are preparing for a pivotal summit in Beijing this July, marking half a century of diplomatic relations with China.

The gathering is expected to serve not only as a symbolic milestone but also as a strategic juncture for the EU to articulate its evolving stance on China and reassess its broader geopolitical role.

Following talks at Lancaster House in London, US President Donald Trump described the relationship with China as “excellent” while stating that the deal is now subject to final approval by him and President Xi Jinping. “We are getting a total of 55 per cent tariffs, China is getting 10 per cent,” Trump wrote on TruthSocial.

The framework foresees China supplying US companies with magnets and rare earth metals, while the US withdraws its threat to revoke visas for Chinese students.

Previously, Trump and Xi had spoken over the phone to pave the way for the London negotiations, which were led by senior officials from both countries.

In May, the US and China agreed to a fragile truce in Geneva to ease, but not eradicate, the tariffs previously announced by the two governments in a tit-for-tat exchange after the US president launched a trade war earlier in the year. What Trump called “Liberation Day tariffs”, Xi denounced as “unilateral acts of bullying”.

Bigger issues remain unaddressed

Clyde Russell, Asia commodities and energy columnist at Reuters, says that the deal, while avoiding total collapse, falls short of addressing core issues. Higher US tariffs will raise prices and dampen growth. It will not bring back manufacturing jobs to the US or resolve its dependence on Chinese-controlled resources.

Importantly, the deal fails to tackle deep-rooted problems, such as Beijing’s domination of rare earths, which weakens the US’s negotiating power in the long term. However, Russell warns that if China uses this control to put pressure on the US in future disputes, it might motivate Washington and its allies to find alternative sources.

Meanwhile, Philip Luck, a director in the economics programme at the Centre for Strategic and International Studies (CSIS), argues that the US made a poor policy decision by attempting to control ethane exports to pressure Beijing. This backfired against US companies and made the US appear unreliable as a supplier.

Worse still, it barely affected China’s industry, which quickly adapted by switching raw materials. The policy was based on weak assumptions and poor analysis, reflecting a flawed approach to economic statecraft – and it may undermine US credibility in future negotiations, especially with a powerful and adaptable competitor like China.

Europe stranded in showdown between ‘elephants’

While the US and China clash over trade, the EU finds itself stranded in the middle of a showdown in which decisions made in Beijing and Washington affect not only US and Chinese businesses but companies across Europe and the world.

Joerg Wuttke, former president of the EU Chamber of Commerce in China, told the South China Morning Post that Europe is powerless under the feet of “two elephants trampling on global trade”.

While Trump has given Europe a 9 July deadline to come up with a trade deal, the Union has another key date to look forward to later in the month - the 50th anniversary of diplomatic ties, marked by a summit in Beijing.

It comes at a pivotal time for both sides. The EU is investigating Chinese companies for unfair pricing, while Beijing announced a six-month extension of its investigation into pork imported from the bloc. Both hope for a diplomatic reset.

Getting out of the squeeze

European leaders face tough choices, says Noah Barkin, visiting senior fellow at the German Marshall Fund of the US (GMF). Pressure from China and the US has exposed the bloc’s vulnerabilities.

Beijing’s move to cut rare earth exports was not just collateral damage from US-China disputes, but a deliberate show of force meant to warn Europe against aligning with US policy, Barkin argues.

While there are signs that European policy is hardening, the EU lacks a coherent strategy.

The US is increasingly unreliable, threatening punitive measures while framing European policy decisions as a challenge to its own economic and political power.

That is why the bloc must now navigate the tightening vice by strengthening its policy independence, reducing dependency on Chinese technology and resources, and choosing when and how to respond to pressure from both Beijing and Washington.

“Now more than ever, Europeans need to figure out for themselves what future they want. Not gradually, but suddenly,” Barkin concludes.

[Edited By Brian Maguire | Euractiv's Advocacy Lab ]