How the EU Is Redefining Its Relationships with China and Taiwan

With U.S. President Donald Trump's tariffs sending ripples across the global economy, the EU must now reevaluate its approach to foreign policy as it attempts to offset the effects. How is the EU balancing its "de-risking" from China and stance on Taiwan amid global tensions?

Ever since US President Donald Trump's re-election, Washington has redefined its strategy by imposing tariffs on both longtime allies and adversaries, creating tensions and escalating existing hostilities. With Washington imposing 145% tariffs on Chinese goods and 10-20% levies on EU imports, the European Union (EU) finds itself in a particularly awkward position as it tries, along with other targeted countries, to alleviate the impact of the tariffs while attempting to maintain continuity in its China strategy. Increasingly serious allegations of Chinese-Russian cooperation contributing significantly to the continued war in Ukraine have only increased the difficulty of this approach.

This sudden shift in US trade policy has forced the EU to reconsider its own geopolitical positioning, especially regarding China - a relationship that was already in flux before Trump's return to power.  To put everything in its proper context: the EU has been incrementally distancing itself from China in previous years, with many member states as well as the bloc as a whole adopting a ‘de-risking’ policy in which they have progressively attempted to reduce their reliance on Chinese imports, especially in the electric vehicle (EV) sector, in the face of what they saw as a shifting world order. 

Europe's Pivot: From De-risking to Re-engagement

With Trump’s second term, the world is shifting again - breathtakingly fast.  While the bloc has long been divided on its China strategy - and by some level of extension its approach to Taiwan - its member states are now re-pivoting toward their longtime rival, but also economic partner, as an alternative to the US.  Indeed, in 2023, the US was the EU's top export destination (€501.9 billion) followed by China (€223.5 billion), while China was the EU's largest import source (€516.2 billion) ahead of the US (€346.7 billion). 

Trump’s blanket tariffs have, to some degree, been a source of rapprochement for countries affected, paradoxically nudging some EU leaders, notably Spanish Prime Minister Pedro Sánchez, to advocate for closer ties with China as a counterweight to US “unilateral economic abuse.”  During his recent visit to Beijing—his third in two years—Sánchez emphasised Spain’s commitment to a “positive relationship” with China, pushing for expanded economic cooperation especially in sectors like green technology and agri-food exports. This approach has already yielded tangible results, such as new agreements allowing increased Spanish pork and cherry exports to China, and signals Spain’s willingness to mediate tensions over issues like electric vehicle tariffs. 

In parallel, European Commission President Ursula von der Leyen has stepped up direct diplomatic outreach, calling for a negotiated solution to US-driven trade disruptions and proposing a joint EU-China mechanism to monitor trade diversion and address global overcapacity. In her April 8 phone call with Chinese Premier Li Qiang, von der Leyen framed the EU and China as joint custodians of global trade stability amid US tariff upheaval. She emphasised their shared responsibility as “two of the world’s largest markets” to uphold a reformed, rules-based trading system, and proposed a joint monitoring mechanism to track potential trade diversion, particularly in sectors like EVs and steel that are already grappling with overcapacity. 

Li, on his end, criticised Trump’s tariffs as “economic bullying” but avoided addressing EU concerns about China’s industrial subsidies. While von der Leyen pushed for structural reforms to rebalance the €304.5B EU-China trade deficit—demanding better market access for European firms—Li focused on celebrating 50 years of diplomatic ties and advancing high-level dialogues in green and digital sectors. 

The call also revealed divergences on Ukraine, with von der Leyen insisting peace terms must be “determined by Kyiv” and urging Beijing to leverage its influence over Russia. Both leaders framed the upcoming July 2025 EU-China summit as a milestone, though Brussels remains sceptical of Beijing’s willingness to address core disputes over subsidies and market distortions.

Dual Challenges: EVs and Ukraine

Von der Leyen’s mention of Ukraine directly after calling out the EU-China trade deficit is especially relevant given the two critical fronts where the EU is simultaneously confronting challenges with China.

On the economic side, the EU imposed 45.3% tariffs on Chinese electric vehicles in October 2024 to counter state subsidies that allowed Chinese EVs to be priced 30-40% below European models. This decision has already exposed deep internal divisions: France and Italy support the tariffs to protect Europe's green transition, while Germany fears retaliation against its automotive giants like Volkswagen and BMW. Spain, on the other hand, has pursued negotiated solutions through trade agreements. 

Recent EU-China talks have explored minimum price agreements as alternatives to tariffs, reflecting Brussels' shift toward more "transactional" engagement with Beijing. This EV dispute gained further urgency after Trump's 145% tariffs on Chinese goods redirected Chinese exports toward European markets.

Currently, customs reforms aim to curb undervalued Chinese goods, removing €150 duty exemptions for 4.6 billion parcels entering the EU annually. Meanwhile, China’s retaliatory 125% tariffs on US goods have redirected its exports toward Europe, raising fears of market flooding.

Simultaneously, the EU maintains vigilance regarding China's military-industrial support for Russia's war in Ukraine. Despite China's claims of neutrality, the EU has documented Chinese firms supplying dual-use technologies and even operating weapons production lines inside Russia. In response, the EU's thirteenth sanctions package targeted Chinese entities aiding Russia, and new rules tightened arms-related exports. As EU foreign policy spokesman Anour El Anouni bluntly stated, "without China's support, Russia could not continue its aggression."

This dual-track approach reflects the EU's precarious position as it attempts to balance economic opportunities with China against security concerns, particularly as transatlantic relations deteriorate under Trump's administration.Furthermore, in a dramatic turn since early May 2025, the global trade landscape has shifted again. 

The United States and China reached a temporary truce, agreeing to a 90-day reduction in tariffs: US duties on Chinese goods fell from 145% to 10% for most products, with a final rate of 30% set for the period, while China’s retaliatory tariffs on US goods dropped from 125% to 10%. This de-escalation, though likely temporary, has eased immediate pressures on global supply chains and prompted the EU to reassess its own trade posture. 

In response to persistent US protectionism, the EU imposed new retaliatory tariffs of 10–25% on a wide range of American goods, with further increases planned. Meanwhile, the EU and China have intensified negotiations over electric vehicle tariffs, exploring minimum price agreements as an alternative to the previously imposed 45.3% duties. At the same time, the EU has expanded its sanctions on Russia, now targeting Chinese and Turkish entities accused of helping Moscow circumvent embargoes. 

These rapid developments underscore the volatility of the current trade environment and highlight the EU’s ongoing struggle to balance economic opportunity, security concerns, and shifting alliances.

The Taiwan Factor: Strategic Dependencies and Political Support

The Taiwan factor further complicates this precarious balancing act. Taiwan's €77.7 billion bilateral trade with the EU in 2023 underscores critical strategic dependencies, with the island serving as the EU’s 13th largest trading partner and a key supplier of high-tech goods, particularly semiconductors. Taiwan’s semiconductor industry is world-leading, with TSMC alone holding a 64% share of the global pure play foundry market in late 2024, and the company’s planned €10 billion Dresden plant—backed by EU and German state subsidies—represents a cornerstone of Germany's automotive and industrial future. 

This highlights the EU's technological reliance on Taiwan amid rising cross-strait tensions. At the same time, Brussels is actively exploring rare earth recycling and processing partnerships through initiatives like the Minerals Security Partnership to reduce dependence on Chinese supplies, as China currently produces more than two-thirds of the world’s rare earth minerals.

Political support for Taiwan has also intensified, with the European Parliament's October 2024 resolution marking a watershed moment by affirming Taiwan's right to international engagement and urging preparatory work for an EU-Taiwan investment pact. China promptly denounced this as crossing a "red line", but Brussels has maintained its support for the cross-strait status quo, with the European Parliament reiterating its opposition to any unilateral changes in the Taiwan Strait and condemning China's military provocations, cyberattacks, and disinformation campaigns targeting Taiwan. The EU increasingly draws parallels between China's behaviour toward Taiwan and its arms supplies to Russia, framing both as threats to regional stability.

This emerging trilateral dynamic—with the EU caught between an increasingly protectionist United States and an assertive China—presents Brussels with an unprecedented strategic dilemma. As transatlantic relations deteriorate under Trump's administration, the EU finds itself performing a delicate balancing act: pursuing economic opportunities with China where feasible while maintaining firm lines on security concerns in Ukraine and technological dependencies through Taiwan. 

The upcoming EU-China summit in July 2025, which will take place in Beijing (breaking the normal rotation), will test whether this pragmatic approach can produce meaningful results or whether Europe's attempt to navigate between these competing powers will ultimately prove unsustainable. For now, the bloc remains suspended between its traditional Western alliance and the economic gravitational pull of the East—a position as uncomfortable as it is unavoidable in today's shifting geopolitical landscape.

This article was previously published on CommoWealth Magazine on Mat 29, 2025.