China and the EU are teaming up to fight back against Trump's trade war

Vincent Kessler/Reuters; Evan Vucci/AP Photo; Jochen Zick/Getty Images; Lintao Zhang/Getty Images; Jenny Cheng/Business Insider
  • President Donald Trump has imposed trade tariffs against the European Union and China, sparking trade conflicts with allies and rivals alike.
  • European and Chinese officials have formed an unlikely team at the World Trade Organisation.
  • At a meeting this week, officials attacked Trump’s approach and said they wanted to set the rules to suit their approach.
  • A trade expert warned against “creating a fortress America while the EU, China, and others play offence.”

The European Union and China are teaming up to rewrite global trade rules, their latest move as part of the trade conflict President Donald Trump has launched as part of his “America First” agenda.

The two powers usually find themselves on opposite sides in economic disputes. The EU has long blamed China for flooding its markets with cheap steel and has imposed its own steep tariffs on Beijing.

But on this issue the two have been driven together by Trump’s increasingly aggressive push to levy tariffs both on rival powers – like China – and also on longtime allies like the EU.

Eu china trade talksEuropean Union Audiovisual ServiceJyrki Katainen, the EU’s vice president on jobs and economic growth, second from left, and Chinese Vice Premier Liu He, second from right.

The pushback took the form of Brussels and Beijing agreeing to form a group inside the World Trade Organisation dedicated to rewriting the global rules on subsidies and tech policy in the light of Trump’s actions.

The two also agreed to uphold the global trading system under the WTO, which Trump has described as “unfair” and bad for the US.

The US slapped tariffs on EU steel and aluminium on May 31 and has more on $US50 billion worth of Chinese goods, including aircraft tires, agricultural machinery, and printer parts, set to take effect July 6.

The EU and China have called Trump’s actions “totally unacceptable” and an “act of extreme pressure and blackmail” while retaliating with tariffs of their own on billions of dollars’ worth of US goods.

Trump on Tuesday threatened to escalate things further. “They must play fair or they will pay tariffs!” he tweeted.

Speaking in Beijing ahead of an annual EU-China summit, representatives warned against countries’ unilaterally taking dramatic action on trade policy, a barely disguised attack on Trump’s approach.

“Both sides agree to firmly oppose unilateralism and protectionism and prevent such practices from impacting the world economy or even dragging the world economy into recession,” Liu He, the vice premier of China’s State Council, said in a speech quoted by Japan’s Kyodo news agency.

Jyrki Katainen, the EU’s vice president on jobs and economic growth, added that actions like Trump’s unilateral tariff hikes against China showed that WTO rules on global trade had to change, the Associated Press reported.

“We have to reform WTO in order to make multilateralism better functioning in the future. This unites the EU and China and the moment,” he told CNBC.

“I’m not naive. I don’t expect fast delivery on all fronts, but first you have to decide whether you are in favour of unilateralism or multilateralism. If you are in favour of multilateralism, then you have to engage seriously, for instance in reforming the WTO.”

Scott Kennedy, a China economy expert at the Center for Strategic and International Studies in Washington, DC, said the new EU-China partnership was “a big deal” and risked leaving the US isolated.

“It is not in the interests of the United States to just be playing defence and creating a fortress America while the EU, China, and others play offence and attempt to set the rules of the game for the next century,” he told the AP.

The EU wants other governments to join the group, the AP reported Katainen as saying.

Xi jinping donald trumpGetty Images/PoolChina and the US are engaged in a trade conflict over tariffs.

The EU has long blamed China for the global overcapacity of steel, and it has imposed steep tariffs on Chinese steel to protect Europe’s domestic metals industry. Katainen urged China to tackle overcapacity in its steel, aluminium, and other sectors including technology, the EU said in a statement.

Separately, France and China also upgraded their bilateral trade relations this week, with Beijing promising to buy more French farm produce and continue talks over the purchase of billions of dollars’ worth of Airbus jets, according to Reuters. President Emmanuel Macron declared China’s interest in buying $US18 billion worth of Airbus A320 narrow-body jets but failed to clinch a deal during a state visit in January.

France also expressed support for China’s Belt and Road Initiative, a massive Chinese project to link some 70 countries across Asia, Africa, Europe, and Oceania through land and maritime trade.

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