Watching China in Europe—January 2026
Trump’s Bombshell
There are historical precedents for the Venezuelan bombshell that US President Donald Trump sprang on the world in the first days of 2026, when most of us were still recovering from the geopolitical tempest of 2025. The most obvious parallel is George H.W. Bush’s invasion of Panama in 1989 to oust Manuel Noriega, another brazen Latin American narco-strongman like Venezuela’s Nicolás Maduro. And yet we all know in our gut that what we witnessed in the early morning hours of January 3 was much more than an isolated Panama-style military operation to bring down a despot who had run afoul of the United States.
The US attack on Venezuela was the most revealing piece to date in the puzzle that has been Trump’s second-term foreign policy, demonstrating that opportunistic 19th-century-style imperialism, rather than isolationism, is the prism through which the Trump doctrine is best understood. It was, by his own admission, a grab for Venezuelan oil, fitting a pattern in which his administration has tried to strongarm a battered Ukraine into handing over its rare earth mineral resources and bully traditional US partners, in the Americas, Asia, and Europe, into submission on trade.
Rolling the Dice
It may also be a sign of things to come from an administration that has shown a chilling appetite for taking risks, shattering taboos, and deploying brute force—whether on the streets of America or against weakened countries that cannot fight back. What comes next is anyone’s guess. Some leaders in Europe may be hoping that the task of “running” Venezuela will keep Trump and his team busy and distracted. After all, it seems clear that Trump has no plan for how this devastated country of 30 million will be governed. But the Europeans should not count on that.
In his second term, Trump has shown an uncanny ability to multitask, doling out tariffs, bombing Iran, and pursuing deals with Vladimir Putin and Xi Jinping even as he rounds up immigrants, degrades government institutions, and subverts the rule of law at home. There is a risk that the initial success of operation “Absolute Resolve” emboldens him and his entourage to keep rolling geopolitical dice. That was one of the most important takeaways from a weekend press conference in Mar-a-Lago that had enough triumphal, chest-thumping bluster to make Rambo blush. Trump hinted, just hours after toppling Maduro, that regime change in Colombia and Cuba could be next.
Greenland Risk
There are three ways that Trump’s Venezuelan gambit is likely to affect Europe. First, it is no longer so outlandish to think that Trump could make a grab for Greenland, the autonomous Danish territory that he set his sights on during his first term. In December, he named a special envoy to Greenland, Louisiana Governor Jeff Landry, who promised in a surreal video to bring cajun food to the Arctic island. Months earlier, Denmark was forced to summon the top US diplomat in Copenhagen over reports that Trump allies were conducting covert influence operations in Greenland to promote its secession from Denmark. On Sunday, Trump told The Atlantic: “We do need Greenland, absolutely.” A day earlier, the wife of his top advisor Stephen Miller tweeted out a map of Greenland covered in an American flag, with an ominous one-word caption: “SOON”. The Danes are right to be worried. Trump’s ambitions for Greenland pose as big a risk to the transatlantic relationship in 2026 as the fate of Ukraine.
Second, it should be clear by now (if it was not already) that “stability and predictability” in Europe’s relationship with the United States, as European Commission President Ursula von der Leyen described it after her tariff deal with Trump last July, is a pipe dream. Greenland aside, in 2026 Europe is likely to be the target of an intensifying, multifaceted pressure campaign from the Trump administration, with the aim of undermining EU institutions, bolstering far-right political parties, and forcing Brussels to dismantle its digital regulations. All of this was stated in black and white in last month’s National Security Strategy. This is likely to have important implications for Europe’s relationship with China. As one EU official told me: “The US sucked the oxygen out of everything last year. How we move forward with China will depend on whether there is some stability with the US.”
More Space for China
Third, while I do not expect Trump’s Venezuelan adventure to substantially change China’s calculus on Taiwan or Russia’s approach to Ukraine and Europe, the president’s newfound focus on the Western Hemisphere will not go unnoticed in Beijing and Moscow, which are keen to carve out their own spheres of influence. Trump is not pivoting away from Europe to Asia, as many pundits and China hawks in his administration expected when he returned to the White House. He is pivoting to the Americas—and that risks leaving more space for Xi Jinping and Vladimir Putin in their respective neighborhoods, especially if Venezuela turns into a quagmire.
The coming year, therefore, is shaping up as a far more challenging one for Europe than 2025. If crisis helps shake European capitals out of what I would still describe as a geopolitical torpor, then it could be a good thing. We have seen positive signs in recent months, with German Chancellor Friedrich Merz taking a more active leadership role on Ukraine—despite his setback on seizing frozen Russian assets—and French President Emmanuel Macron issuing a stark warning to China about growing trade imbalances. But Europe’s window for action could soon close. After he hosts the G7 summit in June, Macron will increasingly be seen as a lame duck. A little over a year before French voters choose a new president, no convincing centrist successor to Macron has emerged and the far-right National Rally is as strong as ever.
Biggest Challenge
Merz faces a gauntlet of state elections this year in which support for the far-right Alternative for Germany (AfD) is expected to see a surge, testing the stability of his grand coalition in Berlin. He will be under growing pressure to deliver growth in 2026, after his promised “autumn of reforms” disappointed for its lack of ambition and his government was accused of bungling its debt-fueled splurge on defense and infrastructure. The risk is that, after being subsumed by the war in Ukraine and Trump’s first half-year in office, domestic politics overwhelms Merz in 2026—to the detriment of what is likely to be Germany’s biggest challenge of all in the years ahead: China.
Germany is currently losing 10,000 manufacturing jobs a month amid an intensifying industrial competition with China. A growing number of German companies is calling on Brussels for trade protection and local content restrictions. Even the CEO of BASF, the German chemicals giant that has bet on China like few other companies, recently backed the use of tariffs. Still, the sense of urgency in Berlin is lacking. Germany’s economic woes are more often blamed on over-regulation, energy prices, and US tariffs. Over the holidays, Bild reporter Paul Ronzheimer’s podcast, one of the most popular of its kind in Germany, discussed the challenges facing Germany in 2026 and completely omitted China, touching instead on Trump, Russia, the rise of the AfD, leftwing extremism, the Middle East, and Venezuela.
Skeptisch Abwartend
The coming months will provide a number of important signals on whether the German government is prepared to take the China challenge more seriously, or continue with, as a sheepish senior official described it to me, “skeptisch abwartend” (a wait-and-see policy with a heavy dose of skepticism). Merz, after traveling to India in mid-January, is expected to make his first trip to China as chancellor in late February (no firm date has been set). Before that, the German economy ministry is expected to present an action plan for reducing German dependencies on China for critical raw materials. The government will soon finalize an update to its 2023 China strategy.
More important than the myriad strategies will be how Germany and other big EU member states position themselves on China-related measures coming out of the European Commission in the months ahead. “In 2026 we are going to see one trade defense measure after another being deployed on an almost daily basis,” a prominent European executive who talks regularly with the Commission told me. EU officials also expect the bloc to deploy its Foreign Subsidies Regulation (FSR) more aggressively, including what could be an incendiary case against Chinese auto giant BYD’s plant in Hungary.
The CSA and the IAA
There are also two big China-related pieces of legislation in the pipeline. In mid-January, the Commission will propose a revision to its Cybersecurity Act, in which it is expected to open the door to EU-wide cyber-related restrictions across a range of sectors. Meanwhile, a fierce tug-of-war is taking place over Commissioner Stephane Séjourné’s upcoming Industrial Accelerator Act (IAA), which was due out in December but has been pushed to late January and could be delayed further, officials say. Séjourné is pushing for what some Commission colleagues fear is an overly broad definition of local content that could have serious downstream consequences by increasing the cost and restricting the availability of critical inputs. He is also pressing ahead with strict rules on the conditioning of greenfield investments, which would force foreign companies that want to set up shop in Europe to pre-notify their plans to share technology and know-how, create local jobs, and invest in research and development.
Looming over the Commission’s plans is the threat of Chinese retaliation. Beijing ended 2025 by announcing big tariffs on EU dairy imports and safeguard measures on imported beef. It is crying foul about the Carbon Border Adjustment Mechanism (CBAM) and seems likely to challenge the EU measure at the WTO. Senior Chinese officials have been telling visitors in recent months that they have little interest in dealing with the Commission anymore and will focus their energy on EU member states. “It is very worrying how dismissive they are of EU institutions,” said a French diplomat who met with Chinese officials in Beijing late last year. In a world where Beijing and Washington are seeking to intimidate, coerce, and divide the EU, it will be more essential than ever for European capitals to stick together. “No autocrat likes to see a united Europe, whether it’s a Chinese, American, or Russian autocrat,” the European executive said.