Deepening EU China Tensions: Will Additional Sanctions Satisfy Trump?
The European Union (EU) is grappling with a delicate balancing act, as it looks to enforce sanctions against companies linked to Russia's war effort while maintaining economic ties with China.
Berlin, whose economy is heavily dependent on Beijing, has expressed caution, fearing potential damage to critical sectors such as the automotive industry from a major escalation. However, the EU prefers targeted sanctions against companies linked to the war rather than blanket tariffs, which could fuel sky-high inflation levels and undermine the EU economy.
The EU's new sanctions package, expected to be announced on Friday, will target "crypto, banks, and energy" sectors. This package includes measures against Chinese companies linked to the Kremlin and the Russian war effort, specifically refiners, oil traders, petrochemical companies, and banks in third countries including China.
The problem with targeted export controls on Chinese firms is that they can reopen under another name, creating a "Whack-A-Mole" game. The EU is looking to make more use of these controls, particularly on firms selling military technology to Russia.
The EU is working closely with the G7, as well as the U.S., on the implementation of sanctions. Trump has discussed the EU's new sanctions package with European Commission President Ursula von der Leyen.
Meanwhile, Trump's demands for NATO countries to cut all oil imports from Russia and impose tariffs of between 50 percent and 100 percent on China have not been agreed upon by the EU. The EU diplomats and officials are adamant that slapping tariffs on China is a political and economic no-go.
The EU has already dramatically reduced remaining Russian oil imports. However, several EU countries, including Denmark and Poland, are pushing the EU executive to take advantage of Trump's pressure to strong-arm Slovakia and Hungary, which are still buying Russian oil.
The EU is walking a tightrope between keeping Washington onside against Putin while avoiding a rupture with Beijing, on which Europe's economy heavily depends. This delicate dance is further complicated by the fact that Putin has been identified as the aggressor in the ongoing war in Ukraine.
Trump's demands could be a stratagem to stall action against Russia and potentially flip the blame onto NATO allies. A senior EU official stated that Trump has leverage over Hungary, which is ideologically the closest match to MAGA in Europe.
Despite repeated pledges to diversify away from China, it still accounts for some 21 percent of EU imports. Brussels is historically distinguishing between tariffs and sanctions, with tariffs considered a trade tool and sanctions viewed as a foreign policy tool.
In conclusion, the EU is navigating complex geopolitical waters as it seeks to enforce sanctions against Russia while maintaining economic ties with China. The EU's approach is one of targeted sanctions and close collaboration with its allies, aiming to strike a balance that protects its interests without causing undue harm to its economy.
