Trade tensions strain EU-US ties

Editor's note: Amid shifting global geopolitics in recent decades, the trans-Atlantic bond is being reshaped. China Daily will present a special series to examine these shifts and their long-term implications.

Economic friction is emerging as a primary battlefield for the trans-Atlantic alliance, testing a partnership already strained by strategic divergence. Experts warn that, compared with previous clashes, the current round of trans-Atlantic trade tensions carries deeper strategic and security implications, making its impact far broader.

This persistent economic sparring, experts suggest, is steadily eroding political trust between Washington and Brussels. As the fallout spreads to technology, security, and diplomacy, the trans-Atlantic partnership looks set to shift toward a more transactional dynamic, they say.

The second term of the Trump administration has seen Europe and the US clash repeatedly over technology rules, tariffs on metals, automobiles, and pharmaceuticals. The latest flashpoint of the trans-Atlantic trade tensions came in July, when the European Union fined Google 890 million euros ($1 billion) for violating its Digital Markets Act. Earlier that month, Europe's top court upheld a separate 4.1 billion-euro judgment against the California-based internet giant.

US President Donald Trump, in response, blasted the EU over what he called its illegal decision to fine Google. "We will immediately initiate a 301 Investigation into the practice of 'ROBBING' American Companies," Trump said in a social media post, referring to Section 301 of the Trade Act of 1974.

Though large-scale trans-Atlantic trade confrontations are nothing new, experts say the present standoff differs in its strategic depth and broader implications. Dan Steinbock, founder of the global consultancy Difference Group, said, "Unlike earlier US-EU trade conflicts over agriculture and aircraft subsidies, today's disputes are embedded in great-power competition and global restructuring."

He noted that while the US-EU short-term disputes involve tariffs, subsidies, and market access, the deeper contradictions revolve around the control of technology, investment, and global standards. Steinbock attributed these structural discrepancies to the US pursuit of unipolarity clashing with the EU's quest for multilateralism in the multipolar world.

Sun Chenghao, head of the US-Europe Program at Tsinghua University's Center for International Security and Strategy, echoed this view, saying the deeper issue lies in the two sides' different approaches to coping with the impact of globalization.

The US, he noted, places greater emphasis on leveraging national power to promote manufacturing reshoring, supply chain security, and technological competition. "Europe, while also strengthening its industrial policy, remains constrained by its supranational governance and member state coordination mechanisms, generally relying more on rule-based frameworks, open markets, and collective negotiation."

"In the short term, specific tariff rates, exemption lists, subsidy amounts, and market access are negotiable conflicts of interest," Sun said. "But the two sides' differences over economic security boundaries, control of critical industrial chains, and global rule-setting power are more structural. It will be difficult to restore the high degree of consensus on free markets they once shared. Still, economic interdependence will continue to constrain confrontation and prevent an easy slide toward full decoupling."

Affecting growth

Sun said tariffs would raise costs and drive supply chain restructuring, shifting trans-Atlantic economic relations "from efficiency-first to security-first priorities" and affecting growth on both sides.

The Turnberry deal, seen as a truce in the trans-Atlantic trade disputes, capped US tariffs on European exports at 15 percent in exchange for the EU removing its duties on US industrial and specific agricultural goods. But experts remain pessimistic about its effectiveness.

Jasna Plevnik, president of the Geoeconomic Forum Croatia, described the Turnberry deal as a "fragile economic truce on shaky legs that lack power to stabilize the economic side of trans-Atlantic relations before it expires in 2029".

She noted that the deal, struck by Trump and European Commission President Ursula von der Leyen in 2025, "failed to resolve deeper differences over digital regulation, green subsidies, and climate taxation", adding that "American protectionist policy is very dangerous for the stability of the EU, and this pact should be seen as a pragmatic option that could temporarily slow down Europe's industrial decline".

Experts say that while US-EU trade frictions will not lead to complete decoupling, sustained economic confrontation will erode political trust between the two sides and spill over into other issues, making the trans-Atlantic partnership more tenuous.

Steinbock said, "Trade disputes reduce trust and limit cooperation on critical issues. Although shared interests will preserve cooperation, these interests are undermined by increasing divides."

Sun predicted a reorientation in the trans-Atlantic relationship. He suggested that the US attitude toward Europe will increasingly emphasize Europe bearing costs and serving the US' competitive advantages.

"Europe, for its part, will maintain security cooperation with Washington while strengthening industrial policy, technological capacity, and rule-shaping power," he said, adding that economic disputes will accelerate this readjustment, shifting the alliance from one driven by common vision to one propelled by practical needs, institutional inertia, and strategic calculations.

"Economic friction will weaken the political cohesion of the alliance and reduce its ability to act in unison on certain global issues," Sun concluded. "However, security needs and institutional ties will continue to act as stabilizers."

yangran1@chinadaily.com.cn