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In 2025, the first shock came from Washington. But it wasn’t the only one.
The world’s largest economy abruptly turned inward, rolling out a nationalist trade agenda and sweeping tariffs on partners worldwide.
Trade flows were forced to reroute – many of them towards Europe. At the same time, as tensions between the US and China escalated, Beijing began weaponising global dependence on rare earths, which are essential for Europe’s tech sector.
Then, European Commission President Ursula von der Leyen warned against the effects of a “second China shock,” referring to the dramatic increase of Chinese exports and industrial overproduction that could flood the European market, putting domestic manufactures at risk.
Committed to its rules-based mantra, the EU found itself with little leverage to confront a new global trade order that is moving away from global cooperation and international rules, despite its efforts to diversify trade ties and tools for countermeasures.
As the war in Ukraine continues, Europe learned the hard way about its vulnerabilities, as its reliance on the US for security compromised the bloc’s trade.
With Donald Trump’s return to office, the White House launched its most aggressive trade offensive in a century, exposing the EU to higher tariffs just as China upped the pressure by restricting the exports of critical minerals needed to make everything, from planes to washing machines.
Walking a tightrope, the EU looked to Latin America, the Middle East and Africa to bolster new export markets – not without complications.
Euronews explores the moments that shaped the year on the trade front – and how the European Union reacted to a historic squeeze between the world’s two superpowers.
2 April ‘Liberation Day’ changed everything
After decades of US-led “happy globalisation,” Trump unveiled a fresh tariff barrage on 2 April from the Rose Garden in the White House in Washington. Liberation Day shocked financial markets with the most sweeping tariffs in a century and rattled allies.
The EU was slapped a 20% levy as a response to a $300 billion trade deficit, which Brussels countered with its own figures: a broadly balanced relationship between the two equalised by a €157 billion EU surplus in goods and a €109 billion EU deficit in services.
Far from a $300 billion deficit claimed by the US, when taking into account goods and services, that figure becomes much smaller to some €50 billion.
US tariffs on steel and aluminium also rose to 25%, then to 50% by June, as Washington sought to reshore industry and counter China’s growing overcapacity. The European Union, therefore, became collateral damage in the competition between Washington and Beijing.
As the US raised barriers, governments worldwide rushed to renegotiate market access. Discussions between the EU and the US were tense, erratic, and dominated by threats. Trump dangled punitive tariffs on everything from European films to wines and spirits, at times threatening 200%.
Between April and July, European Commissioner for Trade Maroš Šefčovič flew to Washington 10 times. Talks involved US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer – but real power rested with Trump and adviser Peter Navarro.
Washington also targeted what it called Europe’s “non-tariff barriers,” notably the EU’s Digital Markets Act (DMA) and Digital Services Act (DSA), which have become a political point of tension between the two and have only escalated since.
Brussels insisted regulation was a sovereign right while preparing retaliation lists covering up to €72 billion of US goods – which were suspended to keep talks alive. Von der Leyen even floated striking US services.
Among the member states some, led by France, raised the option of retailing using the Anti-Coercion Instrument adopted in 2023 which allows the EU to hit services, property rights and licences to counter economic coercion coming from foreign countries.
None of it materialised, with the European industry fearing more damage.
“The US has escalation dominance,” an EU diplomat told Euronews at the time.
Unbalanced deal detrimental to Europe and a win for the US
Europe’s dependence on US markets – and on Washington’s military support for Ukraine -ultimately dictated the outcome. On 27 July, von der Leyen and Trump clinched a deal on a golf course in Turnberry, Scotland.
A joint statement published 21 August sealed it: zero EU tariffs on most US industrial goods, while the US tripled tariffs to 15% on EU exports, as well as inking commitments of $600 billion in EU investments in the US by 2028 and $750 billion in energy purchases.
Brussels sold it as the best possible outcome.
Across Europe, critics called it unbalanced, even humiliating.
The Commission’s powerful director-general for trade, Germany’s Sabine Weyand, acknowledged the constraints and even suggested it wasn’t really a negotiation as the US had the upper throughout.
“(The trade deal) created a basis for engagement between the EU and the US on a lot of other issues,” she said. “We will have to see how far that will carry us, but at least we have another basis of engagement with the administration which wasn’t there before,” Weyand said.
She also warned Europe is “paying the price for the fact we ignored the wake-up call we got during the first Trump administration – and went back to sleep. And I hope that this is not what we are doing now,” referring to EU’s dependence on the US security umbrella.
Brussels is currently seeking more exemptions to lower tariffs on more products and relief from steel and aluminium tariffs, which remain stuck at 50%.
Digital rules as trade weapon for Washington
Washington has demanded that Europe cut its own industrial tariffs, requiring legislation now slated for 2026. The US is also demanding that Brussels soften the implementation of digital rules before it lowers tariffs on steel and aluminium.
The EU insists digital rules are off limits. But the pressure on the bloc is growing.
While most US administrations have often complained about what they perceive are a set of rules that target US Big Tech as the EU seeks to regulate where it cannot compete, Trump’s White House is far more aggressive in tone and substance.
The US recently announced it would ban five individuals from entering the country, including former European Commissioner Thierry Breton, accusing him of pressuring social media platforms to censor and monitor content. The EU denies it censors posts.
The European Commission said it would uphold its sovereignty when it comes to setting policy and would take – if needed – “swift and decisive action” to enact it. French President Emmanuel Macron went further, suggesting that the US is using digital rules to coerce and intimidate the EU.
Far from being over, the trade war between the two seems to be shifting into the digital space, a key theme going into the new year.
‘The EU has no leverage with China’
Despite tariff chaos, global trade grew in 2025.
Global goods imports rose 6.35% while exports climbed 6.24%, according to the St Gallen Endowment for Prosperity Through Trade (SGEPT), in Switzerland, an independent tracker of commercial policies.
Meanwhile, China, hit unprecedented milestone, posting a trade surplus of $1 trillion.
Blocked from the US, Chinese exports flooded Europe. Between November 2024 and November 2025, Chinese goods to the EU surged nearly 15%. In some member states, like Italy, that figure topped 25%, meaning a quarter of all imports came from China.
OECD data also showed steel overcapacity at 600 million tonnes in 2024.
As a result, the imbalance is becoming more accurate.
Von der Leyen warned against the negative effects of a “second China shock” in reference to the first China shock produced between 1999 and 2007 that led to outsourcing manufacturing jobs and a surge of Chinese exports.
A second China shock could be even harder to digest as the EU market is already under an influx of Chinese goods, which are also becoming more advanced.
The French president also warned that the current imbalances cannot continue, reminding Beijing that the EU has an array of tools “from tariffs to anti-coertion measures” it could deploy if China refuses to cooperate, in an op-ed published in the Financial Times earlier this month.
Still, the EU has struggled to respond.
Tariffs on Chinese EVs in 2024 backfired. Beijing retaliated in 2025 with duties of up to 42.7% on pork and dairy, signalling it will not ease the pressure.
“EU’s tariffs on EVs are really small compared to the appreciation of the euro,” Alicia Garcia Herrero, a China expert and chief economist for Asia Pacific at Natixis, told Euronews. “Plus, the EU is not really getting the investments it wanted.”
Diplomacy has also faltered. In July, a much-touted EU-China summit yielded little.
And then came the blow.
As global tariffs intensified, China began to restrict rare-earth global exports, jeopardising Europe’s auto, tech and defence sectors. Only after Trump met Xi Jinping in South Korea on 30 October did Beijing ease controls – sidelining EU diplomacy entirely.
The restrictions intensified after Dutch authorities seized control of chipmaker Nexperia, unleashing a tug of war between the European authorities and Beijing. To save face, the Netherlands handed back control of Nexperia to its Chinese owners and China agreed to ease some restrictions. But the episode signaled the limits of EU policy.
“The EU has no leverage with China, it has nothing to weaponise,” Herrero said.
Balancing the relationship remains a top priority for the Commission in 2026, but whether it can gather the political consensus to apply unprecedented tools such as the anti-coercion instrument, remains a question mark as the EU becomes squeezed between China and the US, facing retaliation from both.
Still, with the biggest single market in the world and more than 400 million consumers, the EU has cards to play.
Rules-based trade hanging by a thread
In 2025, Europe’s faith in global rules cracked, but Brussels hasn’t given up on its role as the world’s champion for international trade while trying to cut its dependencies.
Brussels doubled tariffs on steel coming from foreign countries and launched a new economic security doctrine to de-risk trade. Commissioner Šefčovič told Euronews one of the lessons learned this year is that everything “can be weaponised” in a new world order where trade is also used a tool to force politics.
“It very much underlines the lessons we’ve learned over the past years, and it doesn’t concern only China. Today, everything can be weaponised,” Šefčovič said. “For Europe, he argued, “it started with (Russian) gas, then it continued with critical raw materials and high and low-end chips. It can all be weaponised.”
As a result, the EU doubled down on efforts to diversify trade ties too. It struck deals with Mexico, Indonesia, Singapore and revived talks with India, even if it failed to ink a deal before 2025 as it hoped for.
The EU also struggled to seal the Mercosur agreement after 25 years of negotiation with Argentina, Brazil, Paraguay and Uruguay. Italy and France pushed the signature to 2026, while a vote on safeguards meant to protect EU farmers fearing unfair competition from Latin American countries was also deferred to 2026.
For critics, the EU failed to grasp the geopolitical significance of Mercosur. As global trade comes under attack, a deal of that magnitude would have shown the world that there is still strategic value – and benefits – in multilateral relations.
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