When it comes to carrots and sticks, Donald Trump prefers to use the latter to persuade other nations to do America’s bidding.
The US president has unveiled sweeping tariffs on imports and has accused allies and enemies alike of ripping off America.
China, by contrast, has seen an opportunity to turn on the charm. Beijing sees an opening to exploit Trump’s belligerence and forge closer ties with Europe as the US rips up the existing global trade system.
Xi Jinping, China’s president, last week spoke warmly of ties with Brussels, urging the bloc to join Beijing to “jointly safeguard the trend of economic globalisation and the international trade environment, and jointly oppose unilateral acts of bullying”.
Trump’s trade war has given China the chance to shake off its image as the rogue giant of global trade and investment, and appear as a pillar of stability in contrast to a volatile and unpredictable US.
Some EU member states are keen.
Pedro Sanchez, Spain’s prime minister, is actively courting China. In Beijing last week, alongside Xi, he announced a new deal to sell more Spanish pork into China, and sought to secure investment in his country’s EV industry.
Spanish Prime Minister Pedro Sanchez’s recent trade mission to China came at a crucial moment in Sino-European affairs - Andres Martinez Casares/Reuters
Ursula von der Leyen, president of the European Commission, last week spoke with Li Qiang, China’s premier, to call for a “negotiated resolution” to the trade war.
Alicia Garcia-Herrero, senior fellow at the think tank Bruegel, says China’s “charm offensive” seeks to foster closer links with Europe, and much of the rest of Asia, to form a “united front … to isolate the US”.
Perhaps the strongest example of this strategy is the Chinese ban on deliveries of Boeing airliners, announced on Tuesday. It not only will hurt a US national champion still reeling from a safety crisis, but also threatens to hand arch-rival Airbus a virtual monopoly over civil aircraft exports to China. The market is expected to account for 20pc of global demand over the next two decades.
The loss of China would deliver a body-blow to Boeing as it seeks to claw its way back from years of turmoil triggered by two fatal crashes involving the 737 Max.
Conversely, it would be a significant win for France and Airbus. Years of French schmoozing had already put Toulouse-based Airbus on the front foot in the battle to sell planes to China.
Successive French presidents announced bumper orders after leading trade delegations to Beijing, or rolling out the red carpet for Chinese leaders visiting Paris.
Airbus established the first jetliner plant outside Europe in the city of Tianjin in 2009. The company now has two assembly lines there following an agreement signed by Emmanuel Macron and Xi two years ago.
The French manufacturer overtook Boeing to become the world’s biggest planemaker in 2019, thanks in part to its success in selling planes to China and a willingness to establish production there.
It underlines the allure of China: it is a huge market with huge buying power.
This is particularly attractive at a time when the US seems determined to push the EU away. European officials are said to be resigned to the fact that 20pc tariffs will return once a current 90-day pause expires.
Maroš Šefčovič, the European trade commissioner, was left struggling to understand what the Trump administration wants to achieve following meetings in Washington, Bloomberg reported.
Adding fuel to the fire is the fact the White House is now seeking to apply taxes to imported medicines. Simon Harris, the deputy PM of Ireland, a major pharmaceuticals exporter, said it would be “bizarre” to impose new tariffs in the midst of trade talks.
He also noted that Europeans “have every right to have our own perspective in relation to trade” with both the US and China, in the latest signal Brussels will not necessarily go along with Trump’s plans unquestioningly.
None of this means Xi has a free shot at crowbarring Europe out of America’s economic orbit: Trump is expected to use the threat of tariffs to pressure other nations to reject Chinese business, says Maartje Wijffelaars, an economist at Rabobank. “Countries will have to toughen up against China, to be granted ‘friendly’ tariffs in the US.”
The EU may then have to choose between the world’s two largest economies – a tough call when it relies on both.
America is the EU’s dominant customer, with the bloc selling €532bn (£454bn) of goods to the US last year. China is Europe’s main supplier: the EU bought €519bn of goods from the Asian superpower in 2024.
“Europe is losing competitiveness in the Chinese market,” says Andrew Kenningham, at Capital Economics. “You can see that most obviously in the sales of European cars, where the EU’s market share has been falling very steeply for several years.
“China has caught up or overtaken Germany in many areas.”
This reality underlines the risks of forging closer economic ties with China. Doing so could further undermine the EU’s economy.
Closer ties are therefore not likely come in the form of opening Europe up to Chinese goods – the EU is particularly keen to stop the dumping of items diverted by tariffs – but instead investment, says Carsten Brzeski, at ING.
“The EU will prefer having BYD producing cars in Europe, rather than exporting them from China to Europe. It could still support jobs in Europe, if production is in the EU,” he says.
“It could be the reverse position of the past 20 years when European companies produced in China, and China was able to – not to steal, that might be too harsh – but to learn from the Europeans.”
Regardless, cosying up to China is risky as the example of British Steel shows. The company’s Chinese owners have been accused of deliberately undermining British steel production to favour sales from Chinese plants.
Jingye planned to keep steel mills in Scunthorpe but “supply them from China, rather than from Scunthorpe,” Jonathan Reynolds, the Business Secretary, told Parliament on Saturday. It led to fears of deliberate sabotage, which were denied by the Government.
Labour peer Helena Kennedy has called for “an urgent security review of all those Chinese companies operating within our infrastructure”, while Calum Miller, the Lib Dems’ foreign affairs spokesman, warned against letting another Chinese business take over operations in Scunthorpe.
“Giving another Chinese firm ownership of British Steel would be like coming home to find your house ransacked and then leaving your doors unlocked,” he said.
Garcia-Herrero, at Bruegel, suspects Europe will sit tight, rather than tilting towards China.
“Europe feels it is too risky to have such a huge dependence on China,” she says, noting China’s existing dominance of industries ranging from including solar panels and silicon wafers.
“The dependence on the US is being rediscovered, and it is making Europe very nervous too. But that doesn’t mean the other dependence is any better. It will not swing from one end to the other, from dependence on the US to China.”
