Bullied by Trump, US allies turn to China

Keir Starmer and Friedrich Merz could follow the path blazed by Mark Carney

If the news that Canada was striking a strategic partnership with China was not enough of a sign, then Donald Trump’s threat to impose tariffs on European countries to force them to hand over Greenland surely was.

In the first year of his second term, Trump has turned the global order on its head. But only over the past weeks has it become clear that there is no going back. The damage that Trump is doing to America’s closest relationships is changing the geopolitical landscape for good, with facts on the ground being created that will be impossible to reverse.

Canada is embracing an authoritarian China as part of an explicit strategy to reduce its dependence on the United States. And Europe, after a year of bending over backward to accommodate Trump, is entering a new phase of open conflict with his administration that could metastasize from trade into the security realm. US allies in Asia, from Japan to South Korea, are also recalibrating, though more quietly.

The main beneficiary of these developments is China. That was clear from the visit of Canadian Prime Minister Mark Carney to China last week, the first such trip by a Canadian leader since 2017. Just a few years ago, Canada’s relations with China were at rock bottom. Beijing was accused by Carney’s predecessor Justin Trudeau of meddling in Canadian elections. In 2018, China detained two Canadians, Michael Kovrig and Michael Spavor in retaliation for Canada’s arrest, at Washington’s behest, of Meng Wanzhou, a top executive at Huawei and the daughter of the Chinese technology group’s founder. Kovrig and Spavor would spend nearly three years in a Chinese prison.

When the Biden administration announced 100 percent tariffs on Chinese electric vehicles in 2024, Trudeau followed suit. This entente broke down last week when Carney agreed to sharply reduce these duties in exchange for lower Chinese tariffs on Canadian agricultural goods. The move is significant. It heralds a decoupling of the Canadian and US auto markets: Chinese cars will be welcome north of the border and unwelcome below it.

Canada’s sudden about-face with China is all about Trump, whose tariffs and threats to turn the country into the 51^st US state came as a shock, fueling Carney’s come-from-behind victory in a national election less than a year ago. Carney is a widely respected former central banker who is no China novice and probably has few illusions about what closer cooperation with Beijing really entails. This is what makes his trip to Beijing so remarkable. His decision to break from the United States and mend fences with Xi Jinping will not be lost on European leaders, who are caught in the same geopolitical vise, between an increasingly aggressive Washington and an emboldened China.

British Prime Minister Keir Starmer is due to travel to China later this month. In February, German Chancellor Friedrich Merz will make his first trip to Beijing. Both view China as a growing economic and security threat. Germany is losing 10,000 manufacturing jobs a month — in large part due to Chinese competition. But both Starmer and Merz may conclude that reducing the temperature with Beijing makes more sense than continuing down a path of confrontation. If there were any doubts about how to handle Xi before this weekend, Trump’s threat to hit Britain, Germany and half a dozen other European countries with tariffs in a coercive bid to take control of Greenland, will probably have allayed them. Expect sober Realpolitik to prevail. Carney has blazed the trail.

Handing over Greenland to Trump, needless to say, is not an option for Europe. And in that sense, his tariff threat is a clarifying moment for Europe. It no longer makes any sense to submit to “Daddy”, as NATO Secretary-General Mark Rutte called Trump last year. When the abuse goes too far, even browbeaten children sum up the courage to take a swing at their father. Trump’s grab for Greenland dooms the US-EU trade agreement that he clinched with European Commission President Ursula von der Leyen at his golf resort in Scotland last July. Barring an abrupt reversal from Trump, the US and EU are officially back in a trade war.

EU countries could also decide to trigger the bloc’s anti-coercion instrument (ACI). I was told by a German diplomat after a meeting of EU ambassadors on Sunday that the ACI would be prepared and a final decision to trigger it would be taken if Trump follows through on his tariff threat. This would open the door to more far-reaching punitive measures against the US, including in procurement, investment and services. If I were Elon Musk or Mark Zuckerberg, I would be worried about my future in the lucrative EU market. The risk to Europe is that Trump would respond by pulling all US support for Ukraine. But Europe has somewhat better cards than it did last year. Trump has already cut off US financial aid for Kyiv. He could face blowback in Congress. And he will want to avoid further blows to the US economy ahead of the midterms in November.

China will view the fracturing of the transatlantic relationship as an opportunity. It can try to extract concessions from European leaders like Merz and Starmer or offer them a trade truce on China’s terms, like the one it offered Carney. Xi’s goal, as his own economy struggles with deflation and low consumption, will be to keep the EU and UK markets open to Chinese exports. He is in a much better position to achieve that aim than he was only a week ago.

Trump deserved credit in his first term for raising global awareness of the threats emanating from China. One of the most consequential outcomes of his second term may be to slam shut the window on a collective response to those threats. “If you can get a deal with China, you should do that,” the US president said when asked about Carney’s deal with Xi. Welcome to the new global order.