Reengagement with China, EU's best bet

During the first Donald Trump administration, relations between the United States and the European Union were marked by significant tensions and challenges. President Trump's "America first" approach and his skepticism toward multilateral institutions and agreements strained the traditional transatlantic partnership.

And the administration's imposing of tariffs on European goods, particularly steel and aluminum, citing national security concerns, sparked a trade war between the two allies.

At the start of his second stint in office, differences have already emerged in their respective approaches toward Russia and the Ukraine crisis, and in yet another sign that the cozy relations US and its European allies are being shaken, Trump said on Wednesday that his administration would soon announce a 25 percent tariff "on cars and all other things from the EU", which he claimed had been "formed in order to screw the US".

Citing the US trade deficit of about $300 million, he said the bloc had "really taken advantage" of the US, which he said accepts everything from the EU, while the EU doesn't accept US cars and farm products, using "all sorts of reasons why not". The European Commission responded by saying it will react "firmly and immediately against unjustified barriers to free and fair trade".

"The EU will always protect European businesses, workers, and consumers from unjustified tariffs," a spokesperson for the commission said, noting that as the world's largest free market, the EU has "facilitated trade, reduced costs for US ... As a result, US investments in Europe are highly profitable".

The proposed move marks the intensifying frictions between the US and its European partners, which were thrust into the spotlight by the speech US Vice-President JD Vance made at the Munich Security Conference earlier this month, which sharply criticized European leaders and was viewed by much of his European audience as the administration meddling in the internal politics of some of the EU members.

But tariffs are a central part of Trump's economic vision, and he has told his supporters repeatedly that tariffs will do no harm to US consumers. "It's a cost to another country."

That assumption is wrong, because it is US consumers and companies that bear the costs of increased tariffs, through either the higher prices of imported goods or inflation, according to economists. In particular, the cost to lower-income families is magnified given essentials such as food and energy are most exposed to the import tariffs.

The Peterson Institute for International Economics expects that the tariff hikes on imports from Mexico, Canada and China alone will cost a typical US household about $1,200 per year. Now with a trade war looming between the US and the EU, and inflation running at an annual rate of 3 percent, the suffering to be felt by the US' households in the near future is bound to increase.

There is no winner in any trade war, as China has repeatedly reminded the US side. To solve their trade disputes, relevant parties must conduct dialogue and consultation based on equality and mutual respect. The unilateral imposition of tariffs will only complicate the problems and lead to a lose-lose situation. It will also disrupt the global industry and supply chains, dent business confidence, and cause a global economic slowdown.

Trump's proposed tariff hikes should be a wake-up call to Europe, which should join hands with China to uphold their shared commitment to multilateralism and free trade. As the past has shown, strong and stable relations between China and the EU serve as a source of stability and certainty for the world economy. For its own benefit, and that of the world at large, the EU should reconsider its "de-risking" strategy toward China, and work with the country to get the stalled Comprehensive Agreement on Investment over the line.