Advantage Beijing. The just-brokered US-China trade truce demonstrates its ability to withstand Western pressure, while Europe delays decisive action and American power is systematically challenged.
When Washington imposed tariffs around the globe, China flexed its muscles by halting critical mineral exports and magnets crucial for the world’s car, semiconductor, and aerospace industries, not just to the US, but also to Europe. The strategy worked. China agreed only to pause critical mineral export controls for a year. In return, the US cut its tariffs and will allow China to buy sophisticated semiconductors.
Beijing’s success reflects a relentless two-pronged drive to reduce reliance on Western suppliers while pursuing an aggressive, ambitious export offensive. Huawei is producing GPU artificial intelligence chips, reducing dependence on global market leader NVIDIA. European telephone vendors Nokia and Ericsson are losing market share in China as Beijing subjects foreign equipment to new “national security reviews” that slow approvals or block them altogether.
Abroad, Beijing pushes its global footprint through the Belt and Road Initiative, which continues to deliver strategic infrastructure — ports, railways, energy projects — that reinforce Chinese influence on trade arteries from Asia to Africa and the Mediterranean. COSCO’s 67% stake in Greece’s Port of Piraeus, now one of Europe’s busiest container terminals, is a prime example.
In response, the West looks divided. US policymakers see technological dependence on China as a direct national security risk and have taken strong measures to restrict Chinese exports. Europe talks of “de-risking,” but the term has become a linguistic shield against hard choices. By June 2025, only ten of the European Union’s 27 member states had imposed restrictions on “high-risk vendors” such as Huawei and ZTE. Together, those two Chinese telecom firms still hold roughly 30–35% of Europe’s mobile-network infrastructure market — barely down from 2020 levels.
Beyond telecoms, Chinese firms have penetrated clean tech supply chains. Europe’s solar panel industry was hollowed out years ago, and now wind turbines face a similar threat. Chinese producers, heavily subsidized and vertically integrated, undercut European rivals in price and scale. Brussels has responded with investigations and provisional tariffs, but the underlying dependency remains: Europe relies on Chinese components to meet its own climate targets.
The US has gone further in both scope and symbolism. Washington banned Huawei and ZTE from US telecom networks in 2021 and placed them on export control lists that cut off advanced semiconductors and software updates. It has also initiated investigations into possible evasion of those bans, signaling that enforcement — not just rhetoric — matters.
Yet, as the recent Sino-American trade talks revealed, Washington’s ability to decouple from China is limited. China’s monopoly over rare earths is far from its only weapon. Another is China’s dominant position in the global pharmaceutical supply chain, producing 80% to 90% of the active pharmaceutical ingredients that power the generic drugs filling the majority of US prescriptions, including antibiotics.
The US’s ability to shape Europe’s China policy has also diminished. To many Europeans, Beijing has at times appeared a more consistent partner than Washington. Yet this is precisely the moment for America and Europe to close ranks: only through a coordinated transatlantic approach can they hope to meet the China challenge. A realistic China transatlantic strategy must rest on three key measures: de-risking, reciprocity, and industrial resilience.
First, time-bound de-risking. The allies should set explicit “out by” dates for high-risk vendors in critical sectors. Clear timelines create predictability for operators and investors while signaling seriousness to partners. So far, Europe has struggled to match the pace and clarity of such US efforts.
Second, require reciprocity. Access to public tenders, research funding, and infrastructure projects should depend on comparable openness for American and European firms in China. In Europe, the International Procurement Instrument represents a start, but it must be used routinely, not as a diplomatic exception. In the US, there might be little political appetite for collaboration with China on research and R&D — but Europe should step in as a mediator, keeping selective engagement alive where it serves shared Western interests.
Third, promote industrial resilience. Europe and the US must build domestic capacity in strategic technologies. Trade-defense instruments can buy time; they cannot substitute for production. Europe has imposed tariffs on subsidized Chinese electric cars and begun pulling back from Chinese infrastructure. It is attempting to boost domestic semiconductor production, particularly of chips needed for its important automotive business.
The US has done more. Earlier this month, NVIDIA announced that the firm had begun producing its advanced Blackwell AI chips at a TSMC plant in Arizona — marking the first time a Blackwell wafer had been made on American soil. NVIDIA is also assembling its AI supercomputers in Texas and manufacturing networking equipment in California.
None of these measures involves severing economic ties with China. The goal must be to be able to engage on one’s own terms rather than under constraint. In practice, that means diversifying suppliers, enforcing security standards, and ensuring that political leverage cannot be exercised through technical dependencies.
China’s ability to decouple is redefining the global balance of economic power. Its domestic substitution drive, industrial policy coordination, and outbound investment drive give it a competitive advantage. The question is not whether China can decouple — it has already shown that it can, selectively and effectively. The unanswered question is whether Europe and the US can adapt.
Elly Rostoum is a Senior Resident Fellow with the Center for European Policy Analysis (CEPA).
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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