Caught between Trump and China: can Europe survive?

With Trump's so-called ‘beautiful’ tariffs reshaping supply chains and shifting trade flows, European companies are scrambling to adapt. At last week's DACT (Dutch Association of Corporate Treasurers) Summer Conference in Amsterdam, Brzeski had a message that was simple, but far from soothing. ‘Europe needs to act,fast.’  

Based in Frankfurt, Brzeski used the German story as an example. Before Trump announced his tariffs, American businesses and consumers bought more German products, making German economy great again ‘for now’, Brzeski said. And while there are signs that the worst may be over, our German neighbours find themselves caught between the too many years of underinvesting, weakened competitiveness and rising pressure. And there's the competition from China. 

The German government’s plan to invest massively in infrastructure and defence will lead to a cyclical recovery of the economy, according to Brzeski. But it won't be enough. Germany has several structural challenges that need to be addressed. Think of an ageing population, lagging digital transformation, and bureaucratic drag. Which all weigh on economic growth going forward. And Germany, Brzeski warned, is far from the only European country dealing with these issues. What would help, he said? Productivity boosters, for one. And smart immigration.  

Meanwhile, China is taking the lead in sectors Europe once dominated. Electric cars, AI, digital infrastructure;these are no longer future battlegrounds, but today's frontlines. And Europe finds itself playing catch-up. Compared to Trump’s tariffs, Brzeski said, the Chinese story is probably the bigger threat. 

All in all, the picture is anything but rosy. But Brzeski doesn’t believe all is lost for Europe. He pointed to what he called ‘a sky full of silver linings’: higher defence spending and green transition efforts offer investment potential. And let’s not forget that, compared to the US, Europe still has a lot going for it. Our infrastructure, for one, and our robust healthcare systems. Plus, our social economic model. 

That said, Europe's problem has hardly ever been the lack of good and bold intentions. Very often, the problem is the implementation of any of these strategies. Think of the ill-famous Opens in a new tabLisbon Strategy, a 2000 action and development plan with the goal of making the EU the most competitive economy in the world by 2010. ‘Look it up. It’s an example of bold intentions that eventually failed,’ Brzeski urged. 

The key takeaway? There’s a lot of work to be done for Europe, and it’s time to get to it. Economic volatility will remain high, but, thankfully, there are still opportunities. The shifting landscape could very well reward those who are nimble. Those who can anticipate where capital, technology, and trade flows are headed next. 

Brzeski offers a final, optimistic note. If we make the right choices, we can still move forward.’ In a changing world, that may be as close to certainty as we’re going to get. 

Further reading at Opens in a new tabING Think