EU Navigates Rising Trade Tensions with China and US Tariff Threats

BRUSSELS, BELGIUM The European Union is currently grappling with escalating trade tensions involving both China and the United States. This complex economic and geopolitical landscape is drawing significant attention due to its potential for far reaching impacts on global markets and diplomatic relations.

At the heart of the current unease are EU-China trade disputes. European Commission President Ursula von der Leyen has accused China of distorting global trade and restricting market access for European companies¹. Speaking to the European Parliament on July 8, von der Leyen stated, “If our partnership is to move forward, we need a genuine rebalancing: fewer market distortions, less overcapacity exported from China, and fair, reciprocal access for European businesses in China”¹. The EU has imposed tariffs on Chinese electric vehicles, citing alleged government subsidies, and in early 2025, excluded Chinese firms from public procurement contracts for medical devices². China, in turn, imposed a retaliatory ban on European companies bidding for large-scale medical equipment contracts, intensifying the dispute³.

Compounding these challenges are U.S. tariff threats. U.S. President Donald Trump has threatened to impose additional tariffs on countries aligning with “Anti-American policies of BRICS”⁴. On July 8, Trump reiterated this warning, stating, “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy”⁴. European stock futures dipped on July 11 after President Trump “stepped up tariff threats against Europe and Canada”⁵.

Adding another layer to the EU’s broader trade and geopolitical strategies, the European Commission is proposing a floating price cap on Russian oil. On July 10, 2025, the European Commission proposed lowering the Group of Seven (G7) nations’ price cap from $60 per barrel to $45 per barrel as part of a new draft sanctions package against Russia⁶. This mechanism would adjust the cap based on changes in global oil prices⁶.

Fig. 1: Image generated by Grok 3, created by xAI, [date of generation: July 10, 2025].

The European Union faces a multifaceted challenge in balancing its trade relationships and protecting its economic interests. The ongoing disputes with China over subsidies and market access, coupled with the looming threat of U.S. tariffs, underscore a period of significant diplomatic and economic navigation for the bloc.

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Opinion: This complex situation in global trade shows a big moment for the EU. As powerful countries increasingly use money and trade to get what they want politically, the EU will be severely tested to stay independent and protect its own market. The back and forth between pushing for fair trade with China and dealing with the U.S. wanting to protect its own industries could force hard choices. This might change who allies with whom around the world and how goods are made and moved for many years. What happens next will not only decide Europe’s economic future but also its place in a fast changing world.

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