Since Donald Trump returned to the White House, the global trade order has fallen into chaos.
The European Union once relied on China as its largest trading partner. Leaders like Angela Merkel worked hard to balance ties between Washington and Beijing. But today, under Trump’s renewed “America First” agenda, tariff wars have dragged not only China and the EU into conflict, but also India and other major economies.
The ripple effects have been severe. U.S. tariffs triggered retaliatory measures worldwide, and now even countries that once traded smoothly are turning on one another.
A prime example is Europe’s steel industry. Pressured by cheap imports and U.S. tariffs, European steelmakers are demanding protectionist measures at home. German giant Thyssenkrupp plans to cut 11,000 jobs and slash production by 2025. French officials, backed by 10 other EU members, have proposed a 50% tariff on steel imports beyond quotas — a move clearly targeting Chinese products.
European manufacturers blame two things:
- Chinese low-cost steel exports squeezing their market space, especially after the U.S. slapped 50% tariffs on EU steel.
- China’s restrictions on rare earth exports, which they claim weakened Europe’s electric vehicle and green energy sectors, further reducing steel demand.
The result: China is the scapegoat.
Instead of urging the U.S. to lift tariffs, Brussels has turned to limiting Chinese steel. This comes despite the long history of mutually beneficial China-EU trade ties. Since joining the WTO in 2001, China became the EU’s largest import source and its third-largest export market by 2024. For two decades, both sides profited from cooperation.
But tensions have escalated sharply in 2024–2025.
- In June, the EU imposed up to 62.4% anti-dumping duties on Chinese plywood.
- In July, China hit back with 43% tariffs on EU stainless steel and up to 34.9% on European brandy — hitting French producers like Hennessy hardest.
These disputes are not rooted in fundamental hostility. Europe’s main demands are:
- Easier access to Chinese rare earths.
- Reduced trade cooperation between China and Russia.
But by framing these disputes through tariffs, Europe risks repeating historical mistakes.
History shows trade wars solve nothing — only leaving deep scars:
- 1970s U.S.–EU “Steel and Butter War”: A fight over farm subsidies and steel exports led to tit-for-tat tariffs. The result: higher deficits and a lingering agricultural subsidy problem under WTO rules.
- 1985–1995 U.S.–Japan “Semiconductor & Currency War”: Washington forced yen appreciation via the Plaza Accord, devastating Japan’s chip industry and leading to its “Lost Decades.” America temporarily eased trade imbalances, but its own manufacturing still hollowed out.
- 1980s U.S.–Soviet “Energy & Tech Cold War”: Washington weaponized technology exports and energy trade restrictions. The Soviet Union’s economy weakened, but the outcome was a fractured, more unstable global system.
The lessons are clear: protectionism is a short-term fix that ultimately undermines all parties.
Trump’s approach mirrors these failed playbooks:
- Section 232 tariffs on steel and aluminum.
- Section 301 actions against Chinese technology.
Both reject multilateral solutions in favor of unilateral coercion.
China, by contrast, insists it does not seek conflict but will respond when provoked. Its stance remains: no trouble, but no fear of trouble either.
The EU must ask itself: what serves its people better — escalating tariff wars, or returning to the path of cooperation and shared prosperity with China?
References:
- EU anti-dumping and safeguard measures, 2024
- Chinese countermeasures on European brandy and steel, 2024
- Historical trade disputes: U.S.–EU (1970s), U.S.–Japan (1980s–1990s), U.S.–Soviet (1980s)
