Europe Caught Between China and the U.S. in The Trade War

Will reforms of NATO and international trade regimes stop the Trump administration from its protectionist trade measures?

As the tension of a potential trade war rose, Europe found itself stuck in the middle between China and the United States, two of its biggest, most important trading partners.

The United States provides Europe’s biggest market for exports including commodities like cars. Their tie is also strengthened and bounded by the fact that they are NATO allies. However, it is impossible to ignore the fact that China is also a growing force and trading ally with Europe as well.

The Trump administration, adopting protectionist measures and outlooks, has not only challenge China in setting up steep tariffs but also questioned the validity and efficiency of NATO and stated that these institutions that regulate international trade policies and relationships to be obsolete and outdated. This stance against NATO puts China a more appealing partner to Europe than it would have been previously.

Europe may have intended to stay out this increasing tension between China and the United States. However, it was becoming more and more difficult to stay neutral and distant as its economy is deeply dependent on both partnerships.

Europe could also experience repercussions of Trump’s trade tariffs and measures. The series of tariffs and counter-tariffs could potentially get in the way of international trade in general of raw materials and manufactured goods, and therefore imposing slight damage and hindrance on the European economy. Countries like Germany, whose economies are very dependent on its car manufactures and productions, would also suffer if China were to impose tariffs on goods like cars.

Members of the executive board of the European Central Bank has expressed their reluctance and discontent regarding the trade plan of the Trump administration, commenting that “none of this supports growth and employment.”

This trade war also lands at a coincidentally unfortunate time for Europe, since it has yet to fully recover from its economic crisis and its industrial productions are losing momentum and even shrinking in the past few months. Trump administration has already created immense leverage and pressure over individual countries to appeal for exemptions from the tariffs on steel and aluminum, and these measures will incite further disconnect and competition between individual countries and break down established forums of trade disputes and negotiations, like World Trade Organization.

However, there are potential benefits that could arise from this trade war for Europe. If China were to impose tariffs on American products of aircraft parts and airlines, European rival airlines could utilize this opportunity greatly. These benefits fell flat, however, in comparison to the potential risks that have become increasingly steep.

Europe has expressed intentions to work with and invest in China this year, yet there remain suspicion and wariness between the two. Chinese companies have become notorious for conducting unfair competitions due to government-controlled and backed firms and Europe is also wary that China is gaining momentum too quickly and with the aid of European technology, could become a huge overwhelming economic power.

It’s also hard to look past the past alliances between the United States, specifically during the Cold War. Unlike China, Europe and the United States have shared the bond of democracy and free market economy for centuries.

Europe’s current priority would be to negotiate and reach compromise with the Trump administration. Officials have expressed that Europe would advocate for reforms that cater to American criticism and hopefully stall Trump’s trade measures. By fixing the global regime and trade structure, Europe hope to put a stop to the trade war and protect itself from getting involved.