Japan, EU launch trade "alliance" to offset Chinese, US bargaining power

Prompted by growing concerns over sweeping US tariffs and what they call “unfair” Chinese trade practices, the European Union and Japan announced the launch of a “competitiveness alliance” on July 23 to deepen bilateral trade, boost business ties, and develop alternative sources for critical mineral supply chains.

The initiative was one of several agreements concluded between Japan's Prime Minister Shigeru Ishiba and high-ranking European officials during the EU-Japan summit held in Tokyo on July 23, Caliber.Az reports citing Japanese news.

“Together, Europe and Japan account for one-fifth of global GDP and represent a market of 600 million people. We have the weight to shape international standards on trade and technology based on our shared values of fairness and transparency,” European Commission President Ursula von der Leyen said at a press conference standing beside Ishiba and European Council President Antonio Costa.

She outlined the alliance’s foundation as resting on three main goals: boosting mutual trade, improving economic resilience, and increasing cooperation in innovation and both green and digital development.

“Deepening ties between Japan and the EU will contribute to peace and economic stability in Japan and across the Indo-Pacific,” Ishiba said during the same event, emphasising both sides’ commitment to sustaining a “free and fair economic order grounded in reliable and stable rules.”

As reported, both parties also agreed to elevate their current economic dialogue to a higher-level format resembling “two-plus-two” meetings that involve top-level officials from both governments.

The announcement came just a day after US President Donald Trump stated on July 22 that Washington had finalised a new trade agreement with Tokyo that retains some tariffs, while the EU still faces a 30% import duty unless a deal is reached before the August 1 deadline.

In parallel, Beijing has tightened control on seven types of rare earths and magnetic materials—key inputs for defence, clean energy, and automotive sectors—imposing new export curbs in April in response to US tariffs.

Although some exports have resumed under specific licensing conditions, the restrictions have disrupted EU and Japanese industries alike, prompting both to consider joint public-private initiatives to establish alternative sourcing options and reduce their dependency on China, which remains the dominant force in global rare earth production.

By Nazrin Sadigova