Caught between the US and China, Europe is keeping its options open😏, Plus what the new US-China trade truce really means -- China Boss News 6.13.25

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What happened?

After months of escalating trade friction, China and the European Union are entering a fragile de-escalation phase.

Beijing is softening its stance—delaying tariffs on French cognac, accelerating rare earth exports to Europe, and announcing that negotiations over EU tariffs on Chinese electric vehicles are in their final stages.

The move coincides with a broader deterioration in U.S.–China relations.

In London, negotiators scrambled to save a collapsing Geneva trade truce as tensions over rare earths, tech restrictions, and chip flows resurfaced.

Europe, caught in the middle, is maneuvering—not as a neutral party, but as a bloc determined to remain strategically agile in a world demanding hard choices.

Why it matters.

Target and prize

Europe has become a battleground of great power influence.

Washington and Beijing each view Brussels as the critical swing player in a world order increasingly defined by fracture.

America’s ask is blunt: align with export controls, shut out Chinese tech, and help enforce a new perimeter of strategic denial. The framing is values-based, but the mechanism is coercive.

China’s approach is quieter and more surgical.

Instead of punishment, it offers pressure relief—no cognac tariffs (yet), rare earth licenses for Europe, and hints of a compromise on EVs.

Yet neither suitor comes bearing true gifts—only terms.

Washington and Beijing aren’t courting Europe out of goodwill but to tilt the balance of geopolitical power.

China’s strategy is asymmetric, offering just enough reprieve to create cracks in the transatlantic alliance. That makes it easier to execute.

It doesn’t need all of Europe. A few fractures in member state consensus will do.

Still, reading Europe’s détente with China as naïve is a mistake.

Brussels knows the risks: Lithuania’s experience with China’s economic retaliation, the mask diplomacy of early COVID, and the long shadow of China’s role in Russia’s invasion of Ukraine have all left their mark.

Yet Europe keeps the line open—because, for now, its economy demands it.

The trade bloc has spent the past few years working tirelessly to derisk from Russian oil and gas, only to find itself still tethered to China for the critical inputs of its green transition.

The European Green Deal, launched in 2020, is the EU’s roadmap to become climate neutral by 2050. It involves revising existing laws and introducing new measures across energy, farming, construction, and innovation sectors.

Commission President Ursula von der Leyen dubbed the deal Europe’s “man on the moon moment.” The deal gained broad political backing, though Poland opted out of parts.

In 2021, the European Climate Law made a 55% emissions cut by 2030 legally binding.

That ambition, while worthy, leaves Europe exposed—its green transition still hinges on supply chains deeply entangled with China, especially for batteries, rare earths, solar panels, and other critical technologies.

The EU’s mantra may be “derisk, not decouple”—at least until alternatives emerge—but the line between them is under constant strain.

Leveraging scarcity

But from Washington’s perspective, Brussels's slow break looks like drift.

And as U.S.–China tensions sharpen, Europe’s middle path is beginning to look more like a narrowing ledge.

Rare earths are no longer just critical inputs. They’re instruments of strategy.

China refines 90% of the global supply and uses it with surgical precision—there is no full embargo, just a slow grind of delayed licenses and tightened approvals. U.S. automakers feel it, and defense contractors are gaming worst-case scenarios.

Europe, meanwhile, gets selective relief— a calculated wedge, offering what Washington must fight for.

For Brussels, the immediate access is tempting, but the long-term benefits may be even harder to refuse.

Because China isn’t just exporting materials. It’s exporting time for European industries to catch up and reconsider costs and alliances.

Time that Washington isn’t offering.

The choice is ugly, yes.

But accept the opening and risk transatlantic fracture—or stand firm and invite economic pain. Either way, there’s a brute to face.

Meanwhile, Hungary shows what Chinese power looks like.

The South China Morning Post reported that Chinese EV and battery giants are pouring into the country. Subsidies, cheap labor, and Budapest’s open-door policy have made it Beijing’s European beachhead.

And Spain may be next.

China’s Vice President Han Zheng is visiting Spain this week to deepen economic ties. The trip follows Prime Minister Pedro Sánchez’s recent outreach to Xi Jinping and reflects Madrid’s ambition to serve as a bridge between Beijing and the EU.

Spain is actively courting Chinese investment in EVs and green tech, with projects like CATL’s planned battery plant already underway.

Last September, Andalusia’s regional president, Juanma Moreno, returned from a Beijing trip with pledges of €2.5 billion in industrial investment across six provinces—focused mainly on renewables.

To Brussels, that’s a big jolt. To Beijing, it’s proof of concept.

What’s unfolding isn’t just a spat over cars or brandy. It’s a contest for the blueprint of globalization—and the control levers of the next world order.

For China, Europe is leverage. For the U.S., a wavering partner.

For Europe, the question is existential: how to stay sovereign in a world shaped by coercion.

And while the current thaw between Brussels and Beijing is real, it’s transactional—not durable. It may barely survive the week, let alone the next rupture.

This Week's China News

The Big Story in China Business

ANOTHER SHAKY TRADE TRUCE BETWEEN CHINA AND THE US: After months of escalation, Washington and Beijing have agreed—again—to a trade truce.

Following closed-door talks in London and a rare phone call between Trump and Xi, the two sides announced a shaky framework to revive the collapsed Geneva deal.

Under the new terms, China will resume shipments of rare earths and magnets “up front,” easing pressure on U.S. automakers and defense firms.

In return, the U.S. will reopen student visas to Chinese nationals and may relax some chip export rules.

Trump called it a win—“WE ARE GETTING A TOTAL OF 55% TARIFFS”—but the details remain vague. Final approval still hinges on a second handshake.

Unlike Geneva, there were no photo ops or big claims. Beijing called the talks “candid.” Washington spoke of “frameworks.”

The silence said more than the press releases: no one, including - and especially - investors, believes this will hold.

China’s pressure, America’s concession: The Geneva deal didn’t break over tariffs. It broke over minerals.