Chinese President Xi Jinping is visiting Washington this week for talks with US President Donald Trump, amid ongoing tensions between the US and China that are affecting global trade, particularly for Europe. Last week, business leaders from Germany and China convened in Düsseldorf to discuss trade and investment, with the US-China rivalry being a significant underlying issue. Mikko Huotari, director of the Berlin-based China think tank MERICS, noted that both nations are in a strategic stalemate, with neither side needing a breakthrough at this time.
The potential for a trade deal could have implications for the upcoming US midterm elections, but its certainty remains unclear. Trump stated, "We will discuss everything" regarding Xi's visit. The competition between the US and China extends to various sectors, including artificial intelligence (AI), where the US has restricted the export of high-performance chips to China, while China has limited the export of rare earth elements essential for semiconductor production.
Concerns regarding unregulated AI are expected to be addressed during the talks, with Xi advocating for international cooperation and Trump viewing regulation as a potential threat to US leadership in the field. Following a meeting with Chinese Vice Premier He Lifeng, US Treasury Secretary Scott Bessent mentioned discussions about establishing a notification mechanism for AI-related security incidents.
From a European perspective, both China and the US are viewed as challenging partners. European Commission President Ursula von der Leyen referred to the second "China shock" in her recent State of the Union address, highlighting the impact of China's technological advancements on European industries. She noted that this situation is leading to deindustrialization in Europe, which she described as unsustainable.
The EU is pursuing a transition to e-mobility and aims to reduce CO2 emissions, while also considering additional tariffs on low-cost electric cars from China, which benefit from government subsidies. However, German automakers like VW and BMW oppose such tariffs due to the risk of retaliatory measures from China.
A Chinese executive at the Düsseldorf dialogue expressed concerns about China's economic situation, stating that domestic consumption cannot absorb manufacturing and that companies are eager to access foreign markets. Yang Xiepu, director of the Center for Sino-German Cooperation, noted that the US is urging its allies to impose stricter restrictions on China in technology and security sectors.
Trump has threatened the EU with tariffs, contributing to instability within the NATO alliance. Recently, he criticized the EU's offer of "associate membership" to Canada, suggesting potential punitive measures against Europe. Canadian Prime Minister Mark Carney has responded to these challenges by advocating for stronger cooperation among middle powers, emphasizing the need to negotiate from a position of strength rather than weakness.
In early 2026, Carney visited China and established a "new-era strategic partnership," which included reducing import tariffs on Chinese electric cars. Meanwhile, China is actively engaging with US allies to strengthen its diplomatic ties, with Xi attending various international summits despite existing tensions. Carney described this approach as "variable geometry," indicating a flexible alliance strategy based on shared interests. He plans to participate in the upcoming APECE summit in Shenzhen, aiming to ensure that Canada remains a significant player in global discussions.