Make Tariffs Great Again?

During Donald Trump’s 2024 presidential campaign trail, one word echoed louder than the rest – a familiar concept from his first term, but one that would gain significant weight by spring 2025: Tariffs. A slogan aimed at rallying rural voters affected by globalisation, tariffs would go on to disrupt markets and long-standing alliances.

On February 1st 2025, President Trump signed an order to impose sweeping tariffs on Canada, Mexico and China. Shortly after, he announced that U.S. citizens would feel ‘some pain’ from the tariffs. On March 10th, China imposed 15% tariffs on American farm products, with the EU announcing retaliatory tariffs against the U.S. on March 12th. Not long after, on April 2nd, these U.S. tariffs culminated in the renowned  ‘Liberation Day’, as dubbed by the White House, which saw the introduction of a universal 10% tariff. Since then, tensions between the U.S. and China escalated, with each side slapping increasingly high tariffs upon each other. 

The current administration in the White House has angered Western allies and caused U.S.-China relations to reach a historic low. The administration justifies its policies by claiming that the U.S. has been ‘ripped off’ for years. Washington claims to be putting a stop to damages caused by globalisation, rejecting imported physical goods from flooding the U.S. market. The U.S. does run a total deficit (taking into account goods and services) with the EU, which was around 48 billion Euros in 2024, though it does have a smaller trade surplus in services. Furthermore, the administration aims to bring manufacturing back within its borders, specifically when it comes to exerting tighter control over sensitive technologies such as semiconductors. However, it should be noted that the services sector contributes to 77.6% of the U.S. GDP, marking a total cross-border service surplus of 245 billion USD. 

Despite global backlash, the current U.S. administration frames these tariffs as a step toward economic self‑reliance, aiming to correct trade imbalances, even though critics point out that American strength in services and finance undermines the economic‑justice narrative. Yet this economic critique sits alongside a more compelling national‑security rationale. The U.S. is significantly over‑reliant on China for critical inputs, notably rare‑earth elements and gallium, where China controls the bulk of processing capacity used in advanced military systems and telecom infrastructure. Analysts and various think tanks emphasise that despite recent tariffs and export curbs by Beijing, U.S. supply chains remain vulnerable due to the lack of downstream processing; efforts to develop domestic industrial capacity could take a decade or more. 

This helps reconcile the apparent tension: while the argument for tariffs may be weak on pure economic grounds, they are also part of  a broader strategy of ‘forced decoupling.’ Within this framing, tariffs serve as one among several instruments deployed to reduce strategic dependence on China and protect critical supply chains central to national security. 

Overall, the tariffs evince the U.S.’ changing attitude towards its trading partners, demonstrating a shift in foreign policy direction. The EU’s relationship with China is largely affected by a changing U.S. and its current administration. A tariff war, therefore, brings up questions in Brussels as much as it does in Washington and Beijing. 

A Coordinated EU Approach: Brussels Moves East

Diversity in the EU is an asset, but foreign policy requires direction and clarity—uniting 27 member states is not an easy task. Differences in foreign policy objectives coupled with internal divisions hinder the EU’s ability to take coordinated action on the global stage, with no exception to its approach to China. As a result, member states frequently turn to bilateral engagement—Germany through its automotive and chemical sectors, France via diplomatic channels, and Hungary by leveraging investment ties.

Facing growing pressure from Beijing, a united and coordinated China policy is of high strategic priority. Beijing has openly welcomed engagement from Brussels, including during the Munich Security Conference, possibly as part of its ‘charm offensive’. Trade Commissioner Maroš Šefčovič was among the first officials from the new European Commission to formally visit China, carrying out an exchange in March 2025.

The European Union assesses its collaborative efforts with China through a structured, risk-based framework. Through the idea of China being a ‘partner, competitor and systemic rival’, the considerations include a level of strategic dependency in a given sector, the presence of reciprocity and fair market access, alignment with EU values, and compatibility with transatlantic commitments.

Following Western strategic responses to China’s rise, two strategies are most prominent: de-risking and de-coupling. The first refers to selective engagement with China, while the latter essentially implies cutting ties. In the spring visit, the Commissioner put forward economic concerns of the EU, while seeking to cultivate a common ground for collaboration between the EU and China. Issues discussed include EV supply chains and jobs in the EU, with a focus on technology transfer, R&D and the value generated. 

As a result of the shifting global situation, European leaders are boosting policies for economic and strategic autonomy. As the U.S. continues to dismantle certain bridges with Europe and furthers its pivot to Asia, China increases its chances to expand its international influence.

Marking the 50th anniversary of EU-China diplomatic ties, President Xi declared that China is ‘ready to work with European Union leaders’ to expand mutual openness and handle differences accordingly. Beijing has seized 2025 as a great year to further court European leaders. Brussels, meanwhile, is cautiously opening up more channels to Beijing, being mindful of its long-time alliance with Washington. European leaders have reassured Washington that this outreach to China is in fact not a strategy to alienate the U.S. from previous long-standing alliances, but to serve a broader ‘de-risking’ strategy that reduces the EU’s dependencies and vulnerabilities. Though with the new U.S.-EU Trade deal, it should not create a rift in EU-Chinese relations.

Upon this mixed approach of caution and strategic opening-up, Brussels formally linked economic resilience and national security through the European Economic Security Strategy (EESS) for the first time in 2023.  The strategy outlined tools to screen outbound investments and exports of sensitive technologies, in effect tightening control over know-how that might strengthen systemic rivals. This reflects a broad consensus in Europe that certain dependencies – whether for advanced microchips, telecom equipment, or rare earths – pose unacceptable risks to economic and national security. Adding to this, China’s contentious position, according to several policy makers within the EU, on Russia’s invasion of Ukraine has caused real problems in engagement between both sides. 

Many of the points mentioned in the EESS are relevant to EU-China relations. From the European perspective, there is a need to diversify supply chains, and to mitigate over-dependence in a sectoral area. Technology control and export restrictions ought to be strictly enforced, protecting sensitive technologies such as semiconductors and quantum computing. There will be more screening on foreign direct investment, closing off the possibility to buy strategic EU assets without vetting. Moreover, after further confirmation the European Commission on the Advancing European economic security, introduced five new initiatives in 2024. Notably, cooperation entities based in China have been excluded for innovation actions under the new Regulation. The measures of de-risking should not be seen as decoupling from China. To use the words of European Commission President von der Leyen, ‘it is neither viable, nor in Europe’s interest, to decouple from China’. 

The 25th EU-China Summit

This strategic balance was evident during the 25th EU-China Summit in July 2025. The President of  the European Council, Antonio Costa, and President of the European Commission, Ursula von der Leyen, met with China’s President, Xi Jinping, followed by a meeting with Premier Li Qiang. Expectations for the summit were low, as the duration was cut in half to a single day at Beijing’s request amidst weeks of escalating tension. 

With the summit marking the 50th anniversary of collaboration, the results were limited with both sides agreeing to issue a joint statement on climate change, pledging enhanced coordination ahead of COP30; most discussions revealed persistent friction.

The EU leadership raised many points, including China’s trade practises, the significant trade deficit with China, the Russian invasion of Ukraine, and lastly the need for balanced, rules-based economic engagement. A notable development was the agreement to establish a China-EU export control dialogue.  This mechanism includes fast-track licences for critical raw materials. 

Spain as a Bridge to Beijing 

Over the past decade, President Xi has developed China’s foreign policy throughout several stages. Having foreseen upcoming changes to the world order, he has been preparing China for today’s chaotic world. The uncertainty of the EU-U.S. relationship raises multiple questions: Should Europe align closer with China on trade? And is it possible to collaborate with Beijing as trading partners while simultaneously facing off as strategic rivals? In light of global trade instability and fragmentation within EU member states about collaboration with Beijing, the general tolerance has increased significantly with some Member States, specifically with Spanish Prime Minister, Pedró Sanchez, and his visit to Beijing to meet Xi on April 11th, 2025. It is necessary to note that tolerance has not generally increased across all Member States. The visit was a forward-looking diplomatic move, positioning Spain prominently in further EU-China trade discussions and opening possibilities for deeper engagement and dialogue. However, while it provided new opportunities for bilateral cooperation, it did not fundamentally alter the broader European trade posture towards China.

Following the state visit, Spain and China signed two agricultural trade protocols covering pork and cherry products. On the global perspective, such progress may seem insignificant, but it serves as a gesture that opens doors for both sides. The trade protocols benefit the Spanish economy, offering robust support to domestic producers in the pork and cherry sectors. Meanwhile, the temporary shift from wolf warrior diplomacy indicates China’s openness to deepening ties with European countries amidst global instability. 

Overall, the Spanish stance is less confrontational than that of the French and German governments’ in building a solid diplomatic relationship. This increasingly popular ‘quiet diplomacy’ approach – cautiously avoiding escalation on trade grievances – puts Spain in an interesting position on the European landscape. It can become a bridge between Europe and China, serving as an intermediary for consolidating bilateral relations. 

U.S. officials in Washington and in missions in the EU have warned Spain, and the EU at large, about ‘cuddling up’ to China. Yet, Washington’s actions have incentivised European countries to find closer and new trade partners abroad. As one European official has stated, ‘We will not jump into China’s arms, but we are open to new opportunities. We would be fools not to use our market as a lever now with the Chinese’.

Navigating Tomorrow with Care

When navigating these turbulent times, the EU faces a pressing challenge: Balancing its traditional alliances and core values with realistic (the need for EU external trade) furthering of cooperation with China. The EU’s careful outreach to Beijing reflects both optimism for economic opportunities and caution about strategic risks and dependence. Successfully maintaining this balance will define Europe's future role on the world stage. Ultimately, the EU's ability to adapt, respond to the tariffs, and remain vigilant about dependence will determine its resilience amidst ongoing international challenges.

The European Economic Security Strategy offers a framework for this balancing act. Nevertheless, it is still necessary to remain cautious. The fragmentation within the EU shows how fragile European unity can be when economic opportunities and international calculations collide. We are in exciting times. To echo the European Commission President, we live in a state where ‘a new international order will emerge before the end of this decade’.

As global power dynamics evolve, the EU must reassert its strategic autonomy by articulating a clear and confident identity on the world stage. The task ahead goes beyond merely responding to external pressures, be they Washington’s unilateral tariffs or Beijing’s economic diplomacy, and involves strengthening internal cohesion around a unified, long-term vision. In an era marked by U.S. isolationism and China’s strategic expansionism, the EU has the chance to champion a rules-based international order rooted in openness and reciprocity, while simultaneously bolstering its economic and strategic resilience. Achieving this vision will require sustained unity, strategic pragmatism, and a proactive role in reshaping global governance frameworks in accordance with European values and interests.

This article does not necessarily reflect the opinions of European Guanxi, its leadership, members, partners, or stakeholders, nor of those of its editors or staff. They have been formulated by the author in their full capacity, and shall not be used for any other purposes other than those they are intended for. European Guanxi assumes no liability or responsibility deriving from the improper use of the contents of this report. Any false facts, errors, and controversial opinions contained in the articles are proper and exclusive of the authors. European Guanxi or its staff and collaborators cannot be held responsible or legally liable for the use of any and all information contained in this document.

ABOUT THE AUTHORS

Maxim Baumgaertel is a former trainee at the European Parliament’s Research Service (European Added Value Unit) focusing on economic foresight and Europe’s added value. Maxim’s background lies in Mathematics and he will continue his studies at ESCP.

Adrian Diez Cuadrado is a former trainee at the European Parliament’s Research Service (External Policies Unit) and former intern at the United Nations ESCAP in Bangkok, Thailand. Adrian has created the Neo Institute Europa to make e-Learning accessible and give young thinkers in Europe a platform to shape European policy.

This article was edited by Kalos Lau, Douglas Brenton Anderson, and Sardor Allayarov.