In 'When Trump and Xi seek a war-ending trade deal' by the Asia Times, William Pesek explores the evolving dynamics of U.S.–China trade tensions and the critical role third-party economies — particularly the EU — may play in determining the outcome.

Economist Stephen Jen, chief executive of Eurizon SLJ, cautions against taking China’s economic diplomacy efforts for granted. During the Cold War era, Jen notes, economies not aligned with either the US side or the Soviet Union’s orbit counted for just 18% of global output and 14% of world trade.

Nowadays, such third parties, including the EU, play a “much heftier” role — 44% of global output and 64% of trade.

“Europe holds the key to the ultimate outcome of this US-China rivalry,” Jen says.

In 2024, China exported $516 billion of goods to the EU, almost the same as to the US. Though China ships more to the 10 Association of Southeast Asian Nations (ASEAN) economies, it’s “realistic” to assume that one-third of shipments bound for the US get redirected.

“This process could cascade to lead to the ‘non-aligned’ countries effectively taking the US’ side, leaving China economically isolated,” Jen explains.

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