Watching China in Europe - April 2026

Trump's war with Iran has been a gift to China. European countries are surveying the damage - and scrambling to avoid a two-front conflict with Washington and Beijing.

Andrew Caballero-Reynolds / AFP / Getty

It has been a year since Donald Trump lumbered into the Rose Garden and started a trade war with the rest of the world. “Liberation Day”, the president told supporters gathered at the White House on April 2, 2025, would be forever remembered as “the day American industry was reborn, the day America’s destiny was reclaimed, and the day that we began to make America wealthy again.” It hasn’t worked out as planned. A year on, the United States is weaker, more isolated and less trusted on the world stage. Trump’s tariffs have pushed up prices for ordinary Americans, strained ties with traditional allies, and been judged illegal by a Supreme Court packed with Trump appointees.

On the first anniversary of “Liberation Day”, the US finds itself bogged down in a second war of choice — a real, kinetic one with Iran that has cost American taxpayers tens of billions of dollars, destabilized the Middle East, and triggered a global energy crisis that will leave deep economic scars. These dual conflicts have proven disastrous for some of America’s closest partners. But for China, they are an unexpected gift. A year ago, Beijing responded to Trump’s tariffs with crushing export controls on rare earths that forced his administration into an embarrassing retreat on tariffs, cementing China’s leverage over the US and its G7 partners.

Looking Weak

Trump’s war with Iran risks tilting the balance of power more decisively in Beijing’s favor. It has highlighted a recklessness in White House decision-making that will reinforce China’s narrative that it is the more stable, reliable partner. It is sucking US attention and resources away from the Indo-Pacific, leaving more space for China to flex its muscles, while undermining America’s image in a region that is supposed to be a US strategic priority. It could make cheap Chinese green tech products more attractive, as governments and consumers around the world seek to insulate themselves from swings in fossil fuel prices. And thanks to China’s aggressive stockpiling of energy, it is better positioned to weather, and even profit, from the disruption than other countries. The war is also likely to push China and Russia closer together.

It is no wonder that Trump decided to push back his trip to China. But neither are there any guarantees, Trump’s promise to end the war within weeks notwithstanding, that the situation will have improved by mid-May, when he is now scheduled to travel. “At the beginning of this war, China may have been worried. But now it looks like there is no good way out of this for the US. Either they get bogged down or Trump declares victory without achieving any of his goals and leaves the mess to everyone else,” a French diplomat told me. “When Trump does go to China, he will head there in a weakened state. Delaying the trip by a month or two won’t change that.”

No Longer an Outlier

All of this has major implications for Europe’s relationship with China. In the short-term, it is likely to reinforce an inclination in some capitals to hedge against US volatility by seeking an accommodation with Beijing. This will be on full display in mid-April when Spanish Prime Minister Pedro Sanchez pays his fourth visit to China in three years. Sanchez has emerged as the most openly pro-China (and Trump-critical) leader in western Europe. This has helped Spain attract billions of euros in investments from Chinese companies CATL, Chery and Leapmotor – although it has done little to improve Spain’s yawning trade deficit with China.

A year ago, Spain seemed like a European outlier on China. Today it is France, with its calls for robust trade measures against Beijing, that seems isolated. It may be no surprise to hear Hungary’s Viktor Orbán describe China as “unbeatable”. But this message is coming out of other European capitals these days. I spoke with a senior diplomat from a Nordic country last month who argued that Europe should avoid a clash with China over trade and instead welcome underpriced clean technology imports with open arms in order to fast-track the green transition at the lowest possible cost. The money saved, the diplomat suggested, could be invested in developing next-generation technologies that could vault Europe back into the industrial vanguard. Proper de-risking, in his telling, was too costly and complicated to organize in Europe.

German Pivot

I am hearing a similar message in Berlin, which seems to be in the midst of a whiplash-inducing China pivot. Chancellor Friedrich Merz was one of Europe’s sharpest China critics in his first nine months in office. But last week he shocked people in his own government and in other European capitals by calling for a free trade agreement with Beijing. People close to Merz have played down the significance of the remarks, likening them to his call for a free trade deal with the US when Trump began his second term in January of last year. “It’s not going to happen,” one senior official said. “No one in Berlin is actively pushing the Commission on this.”

Still, his remarks have underscored how adrift the German government remains on China, nearly a year into the Merz government. “There is an acceptance that a China shock is happening, but there is no strategy to respond to it,” the senior official said. “China is not receiving a lot of attention at the highest levels of the government. And I’m afraid that this is unlikely to change. There are so many fires to put out that there is simply no space for China.”

Reiche to China

Some fear that the waters will be muddied further when Economy Minister Katherina Reiche makes her first trip to China in late May, with what officials expect will be a delegation of over two dozen representatives from German business. The lack of direction from the top of the government has alarmed officials in the German Federation of Industries (BDI), who have begun work on a new blueprint for German economic policy that takes into account the geopolitical, technological and industrial shocks hitting the country.

“We need to look at our resilience, our economic security, our relations with China and the United States, our defense priorities, and develop a clear strategy,” an industry official told me. A confidential government action plan on China that some officials had hoped would breathe life into Germany’s stalled de-risking agenda has ended up as a laundry list of previously agreed measures and vague policy pledges, I was told. “It’s fine to reach out to China, as Merz has done but there has to be a Plan B and you have to implement the Plan B,” a second German industry official told me. “I don’t see the Plan B. I don’t believe there is one.”

College Meeting

This leaves the European Commission in a very difficult spot. It is looking for ways to blunt the economic shock coming from China with no clear consensus among EU member states, with China threatening retaliation if Brussels does act, and with the chaos unleashed by Trump sucking up much of the policy bandwidth. Against this backdrop, a meeting of the College of Commissioners has been scheduled for April 13 to discuss the way forward with China. “Everyone sees the situation with the US. Everyone wants to hedge. No one wants a two-front conflict,” an EU official told me. “But at the same time, there is a growing awareness of the damage that China’s policies are doing to our economy.”

France has not given up on the idea of resolving these concerns through dialogue. A few weeks ago, I was told that President Emmanuel Macron was considering organizing a four-way videoconference between him, Trump, China’s Xi Jinping and India’s Narendra Modi in the run-up to the June G7 summit in Évian-les-Bains. This seems more risky now, given rising transatlantic tensions over Iran. “There is still an idea that we need to bring the Chinese to the table in one way or another,” a French diplomat told me.

Behind closed doors, Commission officials are exploring ways to make their trade defense instruments more impactful. In their economic security communication from last December, they promised to “evaluate the effectiveness and adequacy of the existing tools and consider the necessity of possible new measures” by the third quarter of this year. The Industrial Accelerator Act (IAA) and Cybersecurity Act (CSA), both presented by the Commission in recent months, are potential game changers with China but are likely to be watered down by member states and will take up to two years to bed down. Trump or no Trump, the EU cannot afford to wait that long.