Europe caught in crossfire: How 2025 exposed EU’s trade vulnerabilities

Hit by US protectionism and China’s strategic use of economic power, the European Union spent 2025 navigating a historic squeeze between the world’s two largest economies. Euronews traces how Brussels was forced to rethink its trade doctrine as globalisation fractured.

In 2025, the European Union discovered just how fragile its position had become in a world drifting away from rules-based trade. The shock came first from Washington, but it did not end there. As Euronews writes, the EU found itself collateral damage in an intensifying economic rivalry between the United States and China—one that left Brussels with limited leverage and few good options.

The year began with what US President Donald Trump theatrically dubbed “Liberation Day.” From the White House Rose Garden on April 2, Trump unveiled the most sweeping tariff package in a century, rattling markets and allies alike. The EU was hit with a 20% levy, justified by Washington as a response to a $300 billion trade deficit. Brussels pushed back, noting that once goods and services were combined, the imbalance was closer to €50 billion.

Steel and aluminium tariffs soon rose to 50%, and threats followed—on wines, spirits, and even European films. Between April and July, Trade Commissioner Maroš Šefčovič travelled to Washington ten times, but negotiations remained erratic.

As one EU diplomat told Euronews bluntly: “The US has escalation dominance.”

That imbalance shaped the outcome. On July 27, European Commission President Ursula von der Leyen and Trump struck a deal in Turnberry, Scotland. Finalised in August, it granted zero EU tariffs on most US industrial goods, while US tariffs on EU exports jumped to 15%. The EU also committed to $600 billion in investments in the US and $750 billion in energy purchases.

Brussels framed the agreement as damage control. Critics across Europe called it humiliating.

Sabine Weyand, the Commission’s director-general for trade, acknowledged the reality:

“[The trade deal] created a basis for engagement between the EU and the US on a lot of other issues, she noted.

She also warned Europe was “paying the price for the fact we ignored the wake-up call we got during the first Trump administration - and went back to sleep.”

As tensions with Washington spilled into the digital sphere—particularly over the EU’s Digital Markets Act and Digital Services Act—pressure mounted. French President Emmanuel Macron accused the US of using digital rules to “coerce and intimidate” Europe, signalling that the trade war was far from over.

Meanwhile, China posed an equally daunting challenge. Shut out of US markets, Chinese exports flooded Europe, surging nearly 15% year-on-year. Von der Leyen warned of a “second China shock,” as Beijing’s industrial overcapacity threatened European manufacturers. Retaliation against EU tariffs on Chinese electric vehicles and restrictions on rare earth exports further exposed Europe’s weaknesses.

“The EU has no leverage with China, it has nothing to weaponise,” economist Alicia Garcia Herrero told Euronews.

By year’s end, Brussels was rethinking its trade philosophy. It doubled tariffs on steel, pursued new deals with partners from India to Latin America, and adopted a tougher economic security doctrine. As Šefčovič told Euronews, “everything can be weaponised.”

Still, with the world’s largest single market and over 400 million consumers, the EU retains significant power. Whether it can translate that into influence in a fractured global trade order remains the defining question heading into 2026.

By Sabina Mammadli