Europe watches warily as US-China trade truce buys time, but not certainty

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

The 90-day tariff war ‘ceasefire’ agreed by the United States and China in Geneva has been welcomed as a step in the right direction. Although generally praised, the deal may put Europe in a tight spot.

The China Chamber of Commerce to the European Union (CCCEU) welcomed the agreement as an “encouraging development” that will help ease longstanding trade tensions between the world’s largest economies.

“We hope this renewed engagement will contribute to the revitalisation of a rules-based, open, and inclusive multilateral trading system. We encourage all parties to work together in sustaining momentum for global economic growth,” read a statement from the Brussels-based Chinese Commerce Chamber.

Acknowledging the “profound impacts” on global value chains, manufacturing systems, and international commercial relations, the CCCEU noted that the tariff war also strained China-EU economic ties.

They said that dialogue and cooperation remain the most essential tools to address global challenges between China, the EU and the US as the “world’s major economic powers”.

“We are deeply interconnected through trade, investment, and industry. We look forward to further positive signals that promote the normalisation of trade and the stabilisation of supply chains,” remarked the CCCEU.

China cautious over Trump’s ‘total reset’

The temporary truce will see Washington’s duties on Chinese goods drop to 30 per cent from 145 per cent, while Beijing’s tariffs on American goods will fall to 10 per cent from 125 per cent. Global stock markets rallied after the announcement.

But what US President Donald Trump called a “total reset” in the bilateral relationship has not been perceived as such by China, which has accused the US of destabilising the global economic order with the “reckless abuse of tariffs”.

Through an English-language editorial published by state media, Beijing encouraged ongoing dialogue, but made clear that China is prepared for a prolonged and difficult negotiation process if necessary.

The editorial repeatedly asserts China’s unwillingness to accept “unreasonable demands” or “unilateral coercion”, effectively warning that while the country is open to cooperation, it will not compromise its core interests or development rights.

The narrative holds that protectionism disrupts supply chains and undermines multilateral trade norms, while suggesting that recent US engagement is a positive shift towards more rational policymaking.

Europe’s fears eased

The EU welcomed the agreement, with Economic Commissioner Valdis Dombrovskis describing it as a positive development that could help alleviate European concerns about a potential influx of Chinese goods redirected from the American market.

However, he cautioned that the agreement reached last weekend in Switzerland is only for 90 days and that the remaining 30 per cent US tariffs on Chinese products remain relatively high and trade-distorting.

Despite this, Dombrovskis acknowledged that the move may lessen fears of trade diversion. Commission President Ursula von der Leyen had previously called on China to avoid redirecting goods affected by US tariffs to Europe.

The strategic squeeze

While the deal buys time, it signals a shift towards a fragmented, transactional, and bilateral global trade order – one in which Europe must be especially cautious, according to various experts.

Josh Lipsky, chair of international economics at the Atlantic Council, says that while the deal eased fears of Chinese goods being dumped on European markets, it now puts Europe in a difficult position. With US-EU negotiations stalled and American pressure for revenue rising, Brussels is vulnerable to becoming Washington’s next trade target.

Non-resident senior fellow with the Atlantic Council, Barbara Matthews, said she sees the tariff truce as part of a broader “trade rebalancing”, suggesting this moment may restructure global economic power.

Matthews emphasised that the EU, UK, and WTO have lent indirect support to US grievances, isolating China diplomatically and pressuring it towards engagement. The deal incentivises third countries, such as India, Japan, and members of BRICS, to align more clearly with either Washington or Beijing.

Daniel Mullaney, non-resident senior fellow with the Atlantic Council’s Europe Centre, notes that unpredictability in tariff policy is now a deliberate tool used by the Trump administration to reduce dependency on China. European countries that entered talks early may now benefit from avoiding the economic pain China endured.

Several experts highlight that China appears to have the upper hand, managing the crisis strategically while offering few real concessions, all while maintaining domestic control and projecting international rationality.

As global trade realigns, Europe must navigate an increasingly unstable landscape where neutrality is no longer a luxury.

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