EU grapples with US tariffs and Chinese divide‑and‑rule trade tactics

The United States administration announced a new round of tariffs covering 60 trading partners, including the European Union, China and the United Kingdom. The measures raise export costs for EU firms, threaten the euro‑dollar exchange rate and add volatility to European stock markets. At the same time, the European Union is confronting a record trade deficit of about one billion euros per day, prompting a temporary three‑month truce between EU trade commissioner Maros Šefčovič and Chinese trade minister Wang Wentao to stall further tariff escalations.

China is exploiting the EU’s internal fragmentation by offering large investment incentives to peripheral member states such as Hungary and to neighboring countries like Serbia and Morocco. This “divide‑and‑rule” approach weakens collective EU bargaining and deepens reliance on Chinese capital. The situation is reflected in corporate news, with Volkswagen reporting earnings below expectations and cutting its 2026 sales outlook, underscoring broader pressures on the European manufacturing sector.

Overall, the convergence of U.S. tariff policy and Chinese economic strategy is widening trade tensions for the EU, influencing markets, policy discussions and the strategic outlook of European businesses.