Can Europe stand up to China on trade?| The Economist

TL;DR

EU Trade Commissioner Maros Sefcovic argues Europe can resist China's export flood and US tariff pressure through structured engagement, new trade deals, and economic security tools.

Key Points

• 1.Europe's trade position remains strong but is under unprecedented pressure. Nearly 50% of EU GDP and 30 million jobs depend on global trade; Europe is still the world's largest trader in goods and services combined despite US and China disruptions.
• 2.The EU-US trade deal from Scotland offers 15% tariffs on EU goods with a zero-tariff commitment from Europe, but faces political criticism. Sefcovic defends it as the best available deal for certainty, noting Trump retroactively applied agreed rates and expects delivery within one year.
• 3.Sefcovic rejects mimicking Trump's aggressive tactics, preferring dialogue over trade war escalation. He argues European exports to the US have fared better than China's under tariffs, and no business leader has asked him to escalate to open conflict.
• 4.China's trade deficit with Europe is running at €1 billion per day and is described as unsustainable. Chinese exports to Europe rose 50% over five years while EU exports to China fell 30%; China also squeezes European firms out of third-country markets.
• 5.Europe is imposing new conditions on Chinese investment: real jobs, full production lines, genuine IP transfer, and local value-added. Foreign direct investment screening and a new economic security doctrine approved in December are the key enforcement tools.
• 6.Europe's critical minerals dependency on China exceeds 90% for many inputs, and diversification will take 7–10 years per mine. Sefcovic signed a memorandum of understanding with Secretary Rubio and Trade Rep Greer in Washington, looking to pool purchasing power with the US rather than swap one dependency for another.
• 7.Sefcovic argues EU member states are more unified than China's divide-and-rule strategy suggests. Despite Beijing telling national governments that Brussels is the problem, he says full member-state support exists on FDI screening, customs controls, and economic security — aided ironically by Trump's pressure bringing Europeans together.
• 8.New trade deals with Mercosur, India, Indonesia, Australia, and CPTPP partnership are Europe's hedge against US-China deglobalization. Sefcovic uses Ireland's agri-food sector — a 5-million-person country feeding 50 million people's worth of exports — to argue autarky is impossible and open trade is existential for European prosperity.