Watching China in Europe—September 2025
Heaven and Hell
If one were to come up with a Netflix or HBO series that tells the story of Europe’s harrowing summer of crisis diplomacy, one might name it “Submission”, “Braking Dad” or perhaps “Wild Potus”. European leaders spent June, July, and August in a frantic two-track drive to persuade US President Donald Trump to stand by Ukraine and to avert a damaging transatlantic trade war. There were “Daddy” jokes in The Hague, faux-flattery and demeaning pictures at the White House, and long stretches of awkwardness as Trump rambled on about his magnificent achievements, oblivious to the disdain hidden behind the practiced grins and nods of his European counterparts. Trump may have set his sights on heaven, but for the Europeans the past few months felt like hell.
This was the summer when the dangers of Europe’s dependence on the United States came into stark relief. Europe may be an economic power, but as long as it cannot stand on its own two feet militarily, it will think twice about wielding its commercial leverage with Washington. That is why its anti-coercion instrument (ACI), unveiled to much fanfare in 2023, is still sitting on a shelf in the Charlemagne building in Brussels, gathering dust. Between Trump’s trade threats and Chinese President Xi Jinping’s rare earth controls, Europe has never experienced economic coercion on the scale that it has over the past few months. But the tool developed for the sole purpose of countering coercion remains untouched—for now.
Slippery Slope
Still, we need to put this summer of subjugation, as countless articles have described it, into the proper perspective. I am not of the view that Europe should have jumped feet-first into a trade war with Trump. As the EU’s top trade negotiator Sabine Weyand admitted last month in an unusual moment of candor, the decision to swallow baseline US tariffs of 15% was all about preserving US engagement in Ukraine and NATO. Too much was at stake for Europe not to do everything in its power to get a deal with the Trump administration. The agreement leaves Europe worse off, but in a better position than many other US trading partners—if (and this is a big if) it restores some “stability and predictability” to the transatlantic relationship, as Commission President Ursula von der Leyen has been keen to stress.
What it cannot be is the start of a slide down a slippery slope on which Europe bows to one Trump demand after another. There may come a time—and that time may be a lot sooner than Europe wants—when it will need to draw some lines in the sand and think more seriously about retaliatory measures. This scenario is not as far-fetched as some critics of the EU’s approach would have you believe. I was told by a senior European diplomat that if von der Leyen had failed to clinch a trade agreement with Trump in Scotland in late July, EU ambassadors were prepared to give the Commission a green light to activate the ACI in the days thereafter. The required qualified majority of member states had been quietly organized behind the scenes, with the EU’s biggest states—Germany, France, Italy, Spain, and Poland—all prepared to back the move, the diplomat said.
Trade Bazooka
This suggests that the ACI, the bloc’s trade bazooka, could come back into play if Europe is hit with coercive new US tariffs—as Trump threatened before the ink on the US-EU deal was dry—that are designed to force an American-style digital Wild West on the 27-nation bloc. Elon Musk and Mark Zuckerberg may dream of a world in which hate speech, disinformation, and monopolistic behavior go unchecked. The vast majority of Europeans view it as a dystopian nightmare.
Europe must also remain alert to the risk that Trump will go hunting for scapegoats if (or more likely when) his muddled peace push in Ukraine fails. Some people in the White House are already blaming European leaders for sabotaging Trump’s Nobel Peace Prize campaign by encouraging Ukraine to hold out for a better deal than the one-sided land-grab that Putin has offered, and Trump appears to support. On Ukraine and on transatlantic trade, the worst may be around the corner.
Geopolitical winners
The next three and a half years of Trump will be an exercise in damage control for traditional US allies in Europe, Asia, and the Americas. The winners will be those countries that can limit the fallout for their economies and security while preserving their sovereign room for maneuver and political credibility. The fact that Europe has prioritized the former in Trump’s first half year does not mean it will not be compelled to pivot to the latter at some point in the future—even if that means running the risk that trade tensions spill into the security realm. The key beneficiaries of that scenario, as von der Leyen has stated, would be China and Russia. They are the hands-down geopolitical winners of Trump’s ruinous second stint in the White House. If you have any doubts about that, I encourage you to watch this video of China’s Xi, Russia’s Vladimir Putin, and India’s Narendra Modi sharing a laugh at the Shanghai Cooperation Organization summit in Tianjin earlier in the week.
Europe is feeling the effects of an emboldened Beijing and Moscow. In the last week alone, von der Leyen’s plane was the victim of a suspected Russian interference attack and Moscow rained down bombs on Kyiv, killing nearly two dozen people and severely damaging the EU delegation office. A new report from the International Institute for Strategic Studies (IISS) shows that Russia’s attacks on critical infrastructure in Europe almost quadrupled in 2024 compared to the year before. One of the clearest takeaways from the EU-China summit in late July was that Beijing is in no mood to compromise with what Chinese leaders see as a weakened, vulnerable Europe. Over the coming months, the onus will be on the EU to follow through on von der Leyen’s warning that relations with China are at an “inflection point” that could lead to a closing down of the European market.
State of the Union
I understand that von der Leyen’s state of the union speech on September 10 will lay out a blueprint for Europe’s response to the growing economic risks emanating from China. EU officials point to a series of measures that are in the pipeline: concrete projects and partnerships to reduce Europe’s dependence on rare earths from China; a new proposal for defending Europe against Chinese steel overcapacity; a 5G-style toolbox to address cybersecurity risks in connected vehicles; more listings of Chinese entities in the bloc’s 19th sanctions package against Russia; and an updated inbound investment screening regime. By the end of the year, the Commission plans to unveil an “economic security doctrine” that spells out how the EU will deploy its wide range of “protect” tools.
Will all this be enough to get China’s attention? Some senior EU officials believe that bolder economic statecraft will be needed, including the aggressive deployment of the bloc’s Foreign Subsidies Regulation (FSR). The question is whether member states will support more drastic action at a time when they are being hammered by US tariffs and are desperate to get their economies revving again. The good news is that Germany appears to have woken up. Chancellor Friedrich Merz has been sending all the right foreign policy signals since he took office in May. In the last week alone, his government unveiled plans for a new National Security Council to better coordinate foreign and economic policy, and set about jump-starting the stalled Franco-German motor. It also appears to have convinced the developer of a large wind farm in the North Sea to abandon its plans to use wind turbines from China. It is the most concrete sign to date that this German government will take a different approach to Beijing than did its predecessors.
China Action Plan
Foreign Minister Johann Wadephul got Beijing’s attention during an August trip to Japan and Indonesia with his criticism of China’s “increasingly aggressive” actions in the Taiwan Strait and the South China Sea. His ministry is working on a China action plan (Massnahmenpaket) that would build on the 2023 China strategy of the previous government. The list of up to a dozen China policy priorities is likely to focus on de-risking, diversification, and reducing dependencies. It could be published before Wadephul makes his first trip to China as foreign minister—possibly in late October. Merz would then follow in November or December, officials say. That trip will tell us a lot about whether we are witnessing a real shift in Berlin.
But as so often in the EU, the political stars in Europe’s key capitals are not aligned. Germany may be back. But the French government appears on the verge of collapse, the Dutch government crumbled in June and may not be fully operational again until early 2026, and Polish Prime Minister Donald Tusk is crippled by a new right-wing president who will do everything in his power to undermine his government, including by cozying up to that other Donald in Washington. A distressing summer has come to an end. But winter is coming. It may be time to tee up “Game of Thrones”.