As President Donald Trump and President Xi Jinping convene in Beijing for a highly anticipated summit, European capitals are watching from the sidelines with deepening unease. The meeting, which touches on trade, technology, energy, and security, carries implications far beyond US-China relations. For the European Union, the risk is clear: being caught between two superpowers that may strike bilateral deals leaving European interests as an afterthought.
Rare Earths: Europe's Industrial Vulnerability
The most immediate concern for policymakers in Brussels and Berlin is the dominance of China in the supply chain for rare earths—critical minerals essential for electric vehicles, semiconductors, green technologies, and defence systems. European officials fear that a US-China arrangement could prioritise American access to these minerals while Europe remains exposed to shortages and export restrictions. Germany and Japan have already felt the impact of Chinese controls on heavy rare earths, with industries reporting significant disruptions.
"China appears to be selectively licensing exports while preserving leverage over supply chains considered strategically sensitive, particularly where defence or advanced technology applications are involved," said Ilya Epikhin, a consultant at Arthur D. Little.
Germany and Japan are investing in alternative supply chains to reduce dependence on China, but full replacement remains years away. David Merriman, research director at Project Blue, a consultancy, noted: "The situation looks set to get worse before getting any better." A report by the EU Institute for Security Studies (EUISS) is blunt: "Europe is lagging behind. It may have set ambitious local production targets under the Critical Raw Materials Act in 2023, and designated 60 strategic projects to deliver on them. However, it has not adopted the policies needed to make these financially viable in the face of China’s state-sponsored competition."
Trade and Industrial Fallout
The nightmare scenario for Europe is that Trump, who arrived in Beijing under the darkest economic clouds of his political career, negotiates a "managed trade" deal with Xi that sidelines the EU. Such an outcome could allow Chinese overcapacities in electric cars, batteries, and industrial goods to flood European markets, intensifying pressure on domestic industries. Chinese EVs are already 25% to 50% cheaper to produce than European models—the MG4 compact SUV starts at around €30,000, while the comparable Volkswagen ID.3 begins at €40,000.
Jonas Parello-Plessner, a visiting fellow at the German Marshall Fund (GMF), said: "Realistically, the Trump-Xi talks are becoming very bilateral. And one thing is certain: Trump will only speak for himself." The US president has threatened new tariffs on Chinese goods to replace those struck down by the Supreme Court earlier this year. Chinese officials, having learned to navigate Trump's unpredictability during his first term, have reportedly warned US business leaders that they will retaliate "each and every time" Washington acts on trade or investment.
A renewed US-China trade war or sanctions escalation could hit European industries through weaker global demand, disrupted supply chains, and financial volatility. Brussels is already preparing for the worst. Trade Commissioner Maroš Šefčovič told Euronews last month that the EU would strengthen its industrial policy and "fight tooth and nail for every European job, for every European company, for every open sector, if we see they are treated unfairly."
For deeper analysis of how the summit could reshape Europe's strategic position, see our earlier piece on the implications for European interests. Meanwhile, the inclusion of tech executives like Nvidia's CEO in the US delegation—as reported in this article—highlights the technology dimension of the talks. And as middle powers forge new alliances, Europe must consider its own role in a shifting global order, as discussed in this analysis.
In the end, Europe faces a lose-lose proposition: whether the summit yields a deal or a breakdown, the continent's interests are unlikely to be prioritised. The only certainty is that Brussels must act decisively to protect its industries and secure its supply chains before it is too late.
