How Will the Trump Presidency Change EU-China Relations?

From the perspective of the Baltic states (Estonia, Latvia, and Lithuania) the EU’s relationship with China is heavily shaped by broader EU strategies, NATO obligations, and regional security concerns.

The Baltics generally follow Brussels’ lead in foreign policy and rely on collective EU diplomacy and trade frameworks. Any long-term relationship with China will be filtered through the EU’s evolving stance—currently one of “de-risking.” So, while economic cooperation is not off the table, it’s increasingly conditional. On top of that, China’s pressure on Lithuania has bred caution in the region to engage even in non-sensitive investment and trade.

Second, although rattled by the implications of “America First” and appalled by Donald Trump’s sympathy for Vladimir Putin, the Baltic three still see the United States as the main security provider and the backbone of NATO. Therefore, any sensitive investments from China that could have geopolitical anti-NATO implications are unlikely to pass national investment screening.

Third, Russia’s full-scale war against Ukraine is a critical factor. For the Baltics, Russia remains the top security threat, and China’s ambiguous yet aggressor-enabling stance raises red flags. Any perceived alignment between China and Russia undermines trust and makes closer Sino-Baltic ties politically challenging.

As it stands, the Baltic states have limited direct economic exposure to China. As small nations that heavily rely on international trade and global networks, the Baltic approach to China will be conditioned by global supply chains, by strategic allies’ decisions, and by the openings provided in a possible limited EU-China rapprochement, as well as by China’s position on Ukraine in particular and European security architecture in general.

The European Union has no alternative but to build up its military and economic power as much and as fast as possible. European countries have long benefited from the United States’ leading in Europe’s defense and in global governance. This favorable condition is rapidly disappearing as the U.S. redefines its international role. The EU now needs to strengthen its ability to defend itself against Russia while decreasing its dependence on the U.S. This it cannot do without China.

The EU has entered a precarious phase of geopolitical adjustment. For now, it is highly vulnerable to a sudden withdrawal of military support from the United States or of access to the U.S. market, financial system, and technology. As the U.S. tends to regard China as a rival in a zero-sum contest for global supremacy, it may try to use its leverage over the EU to diminish European technological and economic exchanges with China. So whereas the EU needs such exchanges with China in order to achieve greater autonomy in geopolitical affairs, it has limited room to improve relations with China as long as it does not have greater autonomy.

U.S. pressure is by no means the only obstacle for improved EU-China relations. The EU has major concerns about China, such as the country’s economic policies and its strategic partnership with Russia. On the Chinese side, significant concerns include the EU’s program of “de-risking” its economic relations with China, and Europe’s strategic partnership with the U.S. Moreover, the possibility of a future China-U.S. war casts a shadow over EU-China relations today. Such a war could result in the EU and China being adversaries in a major conflict, which impacts how they assess their current ties and dependencies.

The EU has limited space to improve relations with China, and yet it must act. It should not change its main existing China policies, including economic de-risking and pressuring China to refrain from increasing support for Russia’s war in Ukraine. What Europe needs in particular is access to Chinese technology and the Chinese market, and to work with China and other major countries, such as Japan and India, to preserve at least some basic functions of the global governance system. It should also improve mutual investment ties with China. As a follow-up to the never ratified 2020 Comprehensive Agreement on Investment (CAI), the EU needs an arrangement with China to secure its access to Chinese technology via Chinese investments in Europe and European investments in China. And finally, the EU needs to engage with the U.S. on how Europe can preserve its ties with China without endangering the U.S.-China balance of power in Asia. China cannot replace the U.S. as Europe’s primary strategic partner, but as the EU is adjusting to a new geopolitical context it cannot afford to lose China as an economic and technology partner.

The dynamics of EU-China relations have long been discussed as swinging between closer alignment with the U.S. or with China. However, such perspectives have rarely been accurate or helpful—and will be even less so under Trump 2.0. EU-China relations have reached such complexity that they cannot be characterized along a simple one-dimensional line.

Many in Europe have long been unhappy about the lack of recognition of their agency in Washington and Beijing. Chinese voices regularly consider European criticism of human rights or support for Ukraine the result of American influence, unable to see that such policies are the very real expression of European principles and interests.

Similarly, some in the U.S. have tended to see EU engagement with China as a sign of naïveté or of being lured in by China. Republican administrations especially do not seem to appreciate the complexity (and necessity) of international cooperation—and even communication—with those with whom you don’t see eye to eye.

It could be noted that the three-word framework the EU has used to describe China since 2019—partner, competitor, rival—might have inspired the Biden administration’s description of its approach to China as competition, cooperation, confrontation. These frameworks can be criticized for being ambiguous and perhaps stating the obvious, but they do try to capture the nuances of the relationships with China, which is treated as neither a full-fledged friend nor an enemy.

Trump 2.0 is changing the international context in such dramatic ways that it requires international actors to recalibrate their policies. The EU-China relationship will naturally be affected, and it is easy to see reasons why both sides would want to signal that they have a functional relationship. At the same time, these recalibrations should not be equalled by the EU moving closer to China at the expense of the U.S. First, the EU did not choose to distance itself from the U.S.; the unprecedented tensions in transatlantic relations are clearly driven by the Trump administration. If the U.S. changes its position, the transatlantic relationship could still significantly improve.

Second, the EU sticks to many of its positions, such as supporting Ukraine or attempting to de-risk from what many perceive as too much dependence on China. These policies, which are not positive for China, are not going anywhere, even if the EU is open to strengthening cooperation with China in some other areas.

The mainstream position of the EU has been to embrace the complex and multifaceted nature of engagement with China. It would be helpful if more observers and actors in both the U.S. and China would recognize the EU’s positioning as an expression of European agency and interests, not as a result of either American or Chinese influence.

The incoming German coalition agreement classifies China primarily as a “systemic rival,” in line with the shifting tone in Europe. While cooperation on global challenges is deemed to be in Europe and China’s mutual interest, the focus is on reducing economic dependencies and political risks.

Conversely, the Chinese government’s talk of international responsibilities and the future of trade signals its interest in having a closer relationship with Europe. Here, it is important to remember that Ukraine remains a core issue for Europe—and China’s economic support for Russia and its “pro-Russian neutrality” violate Europe’s core security interests.

The public debate in Europe, however, is dominated by the question “What does Trump really want?” and rarely “What does Xi Jinping want?” In a scenario where the U.S. adopts positions aligning with both left-wing critiques of capitalism and the conservative right, China positions itself as a proponent of free trade and multilateralism with “Chinese characteristics.”

Beijing’s growing global presence is already having a far-reaching impact on the European Union. China has secured a dominant position in the procurement of critical raw materials, which it can use as it sees fit—with serious consequences for the EU’s industrial base and growth. China has overtaken the EU to become the most important trading partner for more than 120 countries. In Africa, China is forecast to overtake the EU by 2030, and China is already Latin America’s second largest trading partner after the United States. “America First” and post-liberalism versus the “community of human destiny”: On a narrative level alone, two completely opposing concepts collide. We can already say that China’s story will be more attractive to the non-Western “Rest” than that of the U.S.—and this will have implications for Europe.

With the withdrawal of the U.S. from multilateral structures, a political space is emerging in which China is increasingly asserting its claim to global influence. Germany and Europe would be well advised to engage more intensively with the mindsets, interests, and global political ideas of the Chinese leadership. China knows Europe much better than the other way around, a strategic disadvantage that has long been noticeable in specific policy areas. For instance, even automobile-manufacturing nations such as Germany were largely surprised by the rapid leap in innovation in the Chinese e-mobility sector.

Reducing knowledge asymmetries is crucial. Especially in times of systemic rivalry, an effective China policy requires strategic empathy—and for that, more China expertise is needed. Empathy is not to be confused with sympathy! Rather, it is the ability to understand what drives China’s leadership, including the ideologies, emotions, and histories that shape their reality. Being able to answer these questions is not only strategically important but politically necessary.

When Italy announced its decision to not renew the Belt and Road Initiative (BRI) memorandum of understanding with China, observers cautioned about a potential retaliation from China. During her election campaign, Italian Prime Minister Giorgia Meloni explicitly said she wanted out, calling the agreement a “big mistake” and highlighting that the political environment had changed quite dramatically since 2019.

In December 2023, the withdrawal happened without a loud reaction from the Chinese side. Diplomatic efforts resulted in a new, more pragmatic agreement in July 2024: a three-year action plan for a “soft reset.”

When Meloni was elected in 2022, she was keen on repositioning Italy’s (and her party’s) foreign policy stances on firmer transatlantic and European grounds; long gone are the days of “using [the relationship with China] as a bargaining chip in Europe.” Meloni lacked the political capital of former Prime Minister Mario Draghi. Her Brothers of Italy party, rooted in postwar neofascism, had hardly shied away from anti-European Union, pro-Russia stances before Meloni assumed office. After the election, Meloni morphed into a fierce critic of Putin and a supporter of Ukraine and NATO; a pretense, some say.

During the Biden administration, Meloni had sought to position herself as a privileged interlocutor in Europe. While Washington was arguably concerned about a rising right-wing wave across Europe, Meloni was keen to demonstrate that Italy is a reliable European ally to the U.S., from the BRI withdrawal and a pivot to the Indo-Pacific, to working behind the scenes to get a Ukraine aid deal through. With the election of Donald Trump, Meloni’s sought-after “special relationship” with the U.S. President has become even more crucial.

All eyes are now focused on finding a solution to the tariff fury. “Liberation Day” caught European leaders by surprise, and Meloni’s supposed role as a Trump whisperer has prompted criticism in EU capitals. Overall, transatlantic relations are obviously not doing well: threats to seize Greenland, uncertainty over the Ukraine peace deal, imposition of tariffs—the signals are mixed at best.

However, none of this is enough to prompt a substantial realignment with China. Meloni has actively prioritized Rome’s formal distancing from Beijing, steering the bilateral relationship in a less politically sensitive direction. Like many other European countries, Italy is courting Chinese investments, particularly in the logistics and automotive sectors, and strives to rebalance the trade relationship away from the heavy tilt towards Beijing.

Meloni has also spent significant political capital on Ukraine, as a peace deal with solid security guarantees for Europe is her main foreign policy concern at the moment. If she believes that Chinese economic support for the Russian invasion of Ukraine is a source of friction counter to European interests, and that a European security architecture needs its American pillar, Meloni has hardly any incentive to look east. Italy’s Prime Minister is walking a tightrope, balancing Italian and European interests against Trump’s erratic behavior and wanting to act as a bridge.

For nearly two decades, Europe has been facing trade and investment issues with China. These issues remain unresolved, and their impact is now far more serious for the EU’s economy and industry, as well as for social and political stability, considering the tens of thousands of jobs in the European car industry that are now at risk in the face of China’s highly competitive electric vehicle (EV) companies.

Yes, Europe faces a vital security threat with Vladimir Putin’s war of aggression against Ukraine; it also faces America’s Trump-era tariff war and a profound questioning of the sustainability of the transatlantic alliance and Europe’s security. However, these two threats do not, and should not, overshadow the existing and growing challenges we face with China.

As I write these lines, and since Donald Trump’s election in November, Beijing has shown no sign of making any compromise with the EU, despite the olive branch offered by President of the European Commission Ursula von der Leyen at the World Economic Forum in Davos last January when she said, “I see it as an opportunity to engage and deepen our relationship with China, and where possible, even to expand our trade and investment ties.”

At a time when EU-China trade negotiations are unprecedentedly consequential, there seems to be a dialogue of the deaf between the EU and China. Brussels wants to address the trade deficit, Chinese overcapacity, and inward technology transfer, while Beijing continues to push for the revival of the Comprehensive Agreement on Investment (CAI). The European Parliament put the CAI on hold in 2021 after Beijing sanctioned Members of the European Parliament (MEPs) over their criticism of China’s Xinjiang policies, as well as national MPs, think tanks, and individual researchers. In late April, Beijing lifted the sanctions on MEPs (only), seemingly hoping that the CAI ratification process could now resume. However, not only MPs, think tanks, and individuals remain sanctioned, but this gesture still falls short of addressing the real issue at stake: trade. What’s more, on the European side, there is little belief that the CAI—negotiated between 2012 and 2020—could be revived, as it is now anachronistic in the current context.

Likewise, Europeans persist in urging China to play a more constructive role in helping make peace in Ukraine, or at the very least to stop supporting Russia. In response, leaders in Beijing merely claim China has nothing to do with the “crisis” and look away—when they do not outright blame the Europeans for bearing responsibility for the conflict and for lacking the will to resolve it.

The current Trump-initiated tariff war has put Europe and China in a dire economic situation, and this should force both sides to sit at the negotiating table and make compromises. So far, Beijing does not seem ready.

For years, I have argued that it was a strategic mistake for Europe to follow the U.S. strategy of containing China. I have always called for continuous engagement without naiveté. China is as indispensable and unavoidable in the world economy as the U.S. But now, amid the current “Trump Shock,” I find myself arguing in favor of European constraint regarding China.

Many Europeans are greatly disappointed with the protectionist turn in the U.S. (Trump has even said that the EU was built “to screw” the U.S.), and are looking to China as an alternative. But China cannot be a substitute for the U.S., and the problems that the EU had with China will not disappear because Trump is now in the White House.

Cool heads need to prevail. The EU’s triptych of considering China a cooperative partner, economic competitor, and systemic rival remains the best framework for engagement. It may sound contradictory to some, but it describes well the complexity of the relationship. It is also welcome that the balance has turned from the latter two (competition and rivalry) to the former (partnership). This has been the position of Spain over the past years, and Spanish Prime Minister Pedro Sánchez must feel vindicated. But this does not mean that the existing tensions with China need to be resolved. China continues to indirectly support the Russian war machine by increasing its trade with its northern neighbor. This is worrisome because the future of Ukraine remains an existential issue for the EU. China’s large trade surplus with the EU is also a contentious topic. If the U.S. closes its market to Chinese products even more, China cannot be allowed to dump its overcapacity to the EU. This will stress the relationship even more. Finally, China’s record of human rights abuses and internal repression unsettles many Europeans.

However, despite these problems, cooperation can happen. The electric vehicle (EV) sector is a good example. Europe doesn’t want to be flooded by Chinese EVs, and this is why relatively high tariffs were introduced. But if some of the production happens in Europe, and under certain conditions, it might be welcome. What are these conditions? First, localization. Chinese producers need to rely on local supply chains and produce their batteries in Europe. Second, there will need to be some technology transfer through joint ventures. This could be labeled a “reverse Deng.” The joint venture between Chery and Ebro in Barcelona is a good test case for this. And, third, there needs to be an agreement on data management and governance to ensure cybersecurity. Under these conditions, Europe might remain open for Chinese businesses, and perhaps some of the lost trust can be restored. But one thing is clear: If China does not open up its internal market and overseas corporate operations to European economic interests, Europe is likely to establish even bigger barriers and the relationship might worsen. The ball is in Beijing’s court.

The EU does not want to, and cannot, align with China. This also applies to the economic sphere.

Trump’s blanket tariffs go beyond retrenchment; they are a break with the institutional and normative architecture Washington has spearheaded, expanded, sustained, and benefitted from throughout much of the past 80 years. In fact, Trump is dismantling those very foundations for predatory purposes, working on the misguided assumption of unmatched U.S. political power and economic leverage, and with little certainty that a successful deal will pacify his “America First” instincts. After all, the U.S. president has also levied high tariffs on close allies—such as Canada, Japan, and the Republic of Korea—that he had strong-armed into (re-)negotiating trade deals back in 2017-2021.

Even if U.S. counterparts manage to soothe Trump’s appetite with nothing-burgers, or if Trump chickens out, the further erosion of global norms—including fundamental tenets of customary international law, such as pacta sunt servanda (agreements must be kept)—will accelerate global contestation and the transition to a world dominated by “might-makes-right” power considerations. U.S. openness to recognizing Crimea as de jure Russian territory falls under the same slippery slope logic. As a result, denunciations of China’s violations of international law, including of its encroachment in the East and South China Seas and coercion of Taiwan, will ring hollow. If we consider the murkier legal status of Taiwan versus Ukraine’s Crimea, the double standard becomes even more glaring.

Incoming joint EU-China statements may emphasize principled adherence to an open economy and a rules-based multilateral trading system, thus echoing Beijing’s narratives in its recent diplomatic overtures, in turn reminiscent of those that date back to 2017. The EU, an intergovernmental and supranational organization made up of small and medium powers, has an active stake in an effective multilateral order that respects rules, as do many countries and economies beyond Europe. This means the EU will want to work with China and other states to salvage and reform the World Trade Organization. The establishment of the Multi-Party Interim Appeal Arbitration Arrangement, a parallel dispute settlement arrangement that includes the EU, its member states, and China, among others, is evidence of this inclination.

The Ursula von der Leyen Commission has been aware of growing contestation in world politics, and honed the EU’s economic toolkit to build up leverage and deter potential adversaries. For instance, the Anti-Coercion Instrument, originally conceived as a response to Trump 1.0, was hailed by many as a potential countermeasure to China’s economic bullying when it entered into force in December 2023. Now it may come full circle if the EU leverages it against the U.S. to safeguard its regulatory autonomy. Given EU-U.S. tensions, a degree of stability and predictability in EU-China trade relations may help in dealing with Washington.

Still, Trump’s tariffs may widen the economic rift between the EU and China. Confronted with a massive trade imbalance with China, the European Commission has imposed anti-dumping levies on Chinese (e-)bicycles, tinplate, and titanium dioxide, and countervailing duties on Chinese EVs. These are all extra-import duties that are unlikely to go away, even under the guise of a minimum price for electric vehicles. In fact, the EU Chamber of Commerce in China recently criticized its host country’s industrial policy frameworks and the persistent lack of market access. The President of the European Commission has also established an Import Surveillance Task Force to monitor the “indirect effects” of U.S. tariffs, such as cheap Chinese goods diverted to the common market.

A distinctively geopolitical logic of keeping options open as the world becomes more multicentric will feed the small openings leading to the EU-China summit in July. And EU member states’ courting of Chinese greenfield investment will continue, especially if it leads to technology transfer and complies with local regulations. Still, the EU’s economic grievances vis-à-vis China will persist. To partially offset U.S. protectionism, the Commission will likely re-galvanize the negotiation or realization of free trade agreements (such as the EU-India and EU-Mercosur agreements) over the outdated EU-China Comprehensive Agreement on Investment. The ball is in China’s court, because Beijing needs to match words with deeds.