Heavy clouds have been gathering over the north Atlantic since Trump’s first term of office and Europeans remember that in July 2018 he called the EU a foe. Now that he is to return to the White House come January 20^th, many decision-makers and pundits in Europe are visibly uneasy ahead of his second term of office. Although the broad contours of Trump’s presidency over the next four years are slowly taking shape, we have yet to see what exactly it will look like. Unpredictability being the only predictable trait of Trump’s personality, Europeans are scratching their heads and struggling to guess what to expect from his administration.

In facing the other major global power, China, the EU is between a rock and a hard place. Europe needs Chinese green tech, while at the same time it has to grapple with the geopolitical challenges posed by Beijing’s vision of a new world order based on very different organizing principles and values.

The EU seeks to remain in sync with Washington on trade and investment, and aligned with it on security-related issues, while balancing this stance with its economic dependency on an increasingly assertive China. So, navigating between the two global powers increasingly looks like walking a tightrope for Europe.

Buckle Up for Turbulence in Transatlantic Relations

Over the years, there’s been no shortage of trade disputes between the US and the EU, but Trump’s return to power will only accentuate this feature of transatlantic relations. The incoming American president has threatened to raise tariffs on European exports to the US, which amounted to some €500 billion in 2023. The European Commission whose prerogatives include overseeing the bloc’s common trade policy will seek to cajole Trump, but striking back should by no means be precluded.

While Russia’s invasion of Ukraine brought the Americans and Europeans closer together and led to an ever larger NATO, Trump has consistently accused the EU of “free riding”, a view shared and articulated by other US presidents as well. The incoming tenant of the White House demands NATO member states increase military expenditure to 5% of GDP, though he might ultimately settle for 3 to 3.5%, and it is understood that he is considering linking higher defence spending to Europeans buying more American oil and gas.

At present, only 23 of the alliance’s 32 members meet the 2% spending target, but the war in Ukraine has made it abundantly clear that the era of relying on an exclusive US security umbrella has come to an end. While the current disarray in both France and Germany certainly isn’t conducive to a meaningful political debate in the EU right now, some strategically important decisions need to be made as a matter of urgency. To this end, there are signs that the European defence industry and military expenditure will see a considerable boost. And an extraordinary European Council meeting on defence-related issues has already been slated for early February next year.

On Ukraine, the US president-elect has promised an “immediate solution to the conflict”, without providing any details on how he plans to do that. As a sign of the frosty relations with Kyiv, he has not invited Volodymyr Zelensky to his January inauguration, though he has said the Ukrainian president would be “welcome” if he chose to attend. Europeans worry that US pressure for a hasty ceasefire will be counterproductive and won’t deter Russia from its aggressive posture in the future. At the same time, Trump reportedly intends to maintain US military supplies to Kyiv after his inauguration, which is in line with his transactional logic and image of a salesman.

Europe: Increasingly clear-eyed about China

It is to be seen whether Trump’s threat of raising tariffs on Chinese imports into the US to the tune of 60% is a truthful statement or part of a negotiation strategy aiming to wrench concessions from Beijing. While Chinese authorities would not accept new US restrictions passively, a massive tit-for-tat is not expected immediately – instead, Beijing would consider other strategies as well. Given China’s addiction to exports as the sole growth driver at this stage, one of the alternative responses will be increasing exports to Europe. This will further aggravate the imbalance in EU-China trade and will force Brussels to make more extensive use of its ever-growing raft of defence tools.

There has been a visible shift in European attitudes towards the Asian giant since 2019, when the EU-China Strategic Outlook labelled Beijing simultaneously a partner, economic competitor and systemic rival. The much talked-about Sino-European Comprehensive Agreement on Investment (CAI) was signed in late 2020, but it is now dead in the water after a salvo of EU sanctions and disproportionate Chinese countersanctions in early 2021. The COVID-19 outbreak brought to the fore Europe’s excessive dependency on Chinese goods and triggered a process that culminated in the recent decision of the EU to increase tariffs on electric vehicles (EVs) imported from China.

Over the past few years, most European states have reassessed their China strategies and what Beijing’s leadership ambitions entail. It is fair to say that in general Europeans have developed a much more clear-eyed and assertive approach to China, though there is no Europe-wide consensus on how to address the Chinese challenge. For instance, a recent report released by ETNC (the European Think-tank Network on China) shows that European countries do not embrace the de-risking policy wholeheartedly.

Beijing’s disingenuous stance towards the war in Ukraine has clearly poisoned Sino-European relations, due to Chinese support provided to Russia’s military campaign in Ukraine in the form of dual-use equipment and technologies. Chinese officials pretend that they do not understand why Russia’s invasion of Ukraine calls into question the entire security architecture in Eurasia and why this is an existential challenge for Europeans. Recently, the EU adopted the 15th sanctions package to limit Russia’s ability to wage its war on Ukraine and the list of targeted entities now includes a number of Chinese companies supplying drone and microelectronic components to Moscow.

At the same time, notwithstanding their fundamental differences, the EU and China do have some common ground to step on. Both remain have committed to the Paris Accord on combating climate change, which Trump’s US may pull out of once again.

 Strategic Autonomy vs Equidistance

The EU is rapidly turning into a theatre, if not an arena, for the intensifying Sino-American stand-off. Obviously, Europe has a number of disadvantages vis-à-vis the United States and China. For the time being, the EU doesn’t have its own army and depends to a large extent on the NATO security umbrella. It is also true that the very architecture of the EU renders decision-making a notoriously cumbersome and time-consuming process. The EU is neither a unitary state, as China is, nor a federation like the United States.

To make matters worse, Europe is lagging behind both America and China in terms of innovation, high-tech, productivity and competitiveness. So, the EU clearly is on the back foot – there’s no hiding it. And it is up to Europeans to clean up their act and address the strategic challenges highlighted in a number of policy documents, such as the recent Draghi report.

Most probably, Europe will have a diminishing weight and a different mission down the road into the 21st century. But writing off the EU altogether would be a mistake. The balance of power in the 21st century is a complex set of parameters that are not confined exclusively to military power or technological prowess. Power depends on a long list of assets and the EU will retain some of them. Despite its glaring weaknesses, the EU is still an economic powerhouse – if anything, as a market that both American and Chinese companies are vying for. In addition, Europe’s soft power, as Joseph Nye defined it more than 30 years ago, cannot be overstated either.

The US-China-EU triangle is based on inherently competitive relations and even rivalry, but it is still a distinct configuration, whereby each side needs allies, depending on the issue at stake. Both the US and China need Europe against each other. The trillion-dollar question that the EU needs to answer urgently is whether it should opt for bandwagoning or equidistance, i.e. whether it should take sides or stand its ground in-between Washington and Beijing.

In reality, equidistance between the U.S. and China is not in the cards. Europe will always be closer to Washington than to Beijing – for security reasons, but also because of common transatlantic values. Much as European strategic autonomy is still a fuzzy notion, it is nothing more than a legitimate pursuit to retain the ability to make decisions that best serve the interests of Europeans in an increasingly dangerous world.

Plamen Tonchev is Head of Asia Unit, Institute of International Economic Relations (IIER), Greece

tovima.com