Before we get to Europe’s evolving relationship with China, I would be remiss if I didn’t linger on a Trump mini-controversy that still amuses me two weeks later. The forum was Fox News, the topic was Xi Jinping’s visit to Washington, and David Perdue, US Ambassador to China, shared that in the course of conversations about U.S. weapon sales to Taiwan, President Trump offered to sell U.S. weapons to China, too. “But President Trump continues to say,” the Ambassador explained, “hey, we sell arms to other people around the world. He actually asked President Xi, would he like to buy some?”
Across D.C. and the foreign policy world, the reaction to that disclosure was swift. “Trump’s purported offer to sell weapons to China is demented,” said Zack Cooper, a former Bush staffer who’s now an Asia security expert at the American Enterprise Institute. “I bet Xi was tempted to say: ‘We’ll take one of everything, please.’ It is shocking that Trump is resisting authorizing arms sales to Taiwan but at the same time offering them to China.”
Ryan Hass, a former Obama staffer who’s now the director of the China Center for the Brookings Institution, wrote on Twitter: “If there was any ambiguity about whether President Trump views China as a security threat, this disclosure by Perdue puts the question to rest.”
Trump, for the record, has subsequently denied making that offer to Xi. I, for the record, absolutely believe that some version of this offer has happened. I mean, c’mon. We know this man. Maybe Trump didn’t use those precise words in that particular meeting, but demented or not, I find it very plausible that somewhere along the way, in all the lectures he’s gotten from Xi about selling weapons to Taiwan, Trump has attempted to (for lack of a better word) disarm the General Secretary with exactly the offer that Perdue described.
Most importantly, whether the offer happened or not, I have to memorialize the controversy because it’s one of those news cycles that will inevitably be forgotten, but it’s just such a wonderful microcosm of the current moment we all inhabit with U.S.-China relations. With that anecdote, we have inarguably the chattiest president in American history making an offhand offer to sell U.S. weapons systems to America’s foremost military adversary, possibly in violation of federal law, and definitely at odds with about 70 years of settled U.S. policy. Is he joking? Is he serious? Is he making this up as he goes along?
We’ll return to those evergreen Trump questions at the end; for now, two more observations.
First, if anxious observers across the political spectrum all agree that China IS a security threat, and that the U.S. should be working to counter that threat, then we should also be clear on this point: Trump’s style of freewheeling offers, limited planning, and insistence on leader-to-leader diplomacy has to drive the Chinese side insane. The level of CCP detail that goes into planning the protocols for a Xi visit is staggering, and policy is typically managed by party bureaucrats who meet with their US counterparts weeks in advance. With Trump and his administration, there is far less to do, and the leader himself is unpredictable.
To the extent Trump is difficult to read—keeping Xi off-balance with over-the-top flattery, stray language that departs from longstanding U.S. positions, and occasionally caustic rhetoric and policy—all of that’s good. And if none of it ultimately moves the needle, that’s OK too. The downside of friendly rhetoric is limited. Many commentators were worried that Trump’s pageantry and apparent weapons offer would rattle the confidence of allies in Asia, but Japanese Prime Minister Sanae Takaichi released a long statement suggesting otherwise, while two weeks later Taiwan’s defense ministry announced deepened operational ties with the U.S. military. Meanwhile, Xi reportedly came to Washington hoping that the U.S. would shift its language around Taiwan independence and re-evaluate its commitment to Japan. He left D.C. having accomplished neither.
Second, and this is the big one, I think China hawks need to relax. Life is too short to not smirk at Trump defending the sale of weapons to Taiwan by saying, “Well hey, we sell to everybody, do you want some?”
No, the U.S. is not going to sell weapons to the PLA. And yes, the Trump administration is currently pausing the sale of a $14 billion arms shipment to Taiwan—the arms would not be delivered until the early 2030s, to be clear—after fierce objections from the Chinese side. That does not, however, render Trump a Xi supplicant, or Taiwan an afterthought. Consider the context of U.S. arms sales to Taiwan in the past 12 months ($11.4 billion) or past 12 years, and either way Trump has offered more support to Taiwan’s self-defense than any president in U.S. history. In fact, as Matt Turpin detailed in depth back in June, the current administration may end this presidential term having provisioned more arms support for Taiwan than five preceding administrations combined.
With that record clarified, then: on to Europe.
Brussels and Berlin Enter the Chat
I didn’t realize until this week that I’m coming up on one year of writing Sharp Text. What reminded me of the anniversary was news out of France and Germany that was, at least in part, a response to China’s weaponization of rare earths in October of last year. In the first article I published on this site, I covered the expanded export controls out of Beijing and closed with this:
China is fighting to maintain its standing in the global trading system despite allegations of human rights violations, expansionist military tactics, widespread political and industrial espionage, and trade practices that have eroded industrial capacity all over the world. That’s the context for last week’s escalation. Rather than weathering the storm from the U.S. and presenting itself as the reasonable party upholding the global trading system, Xi and the CCP may have just sharpened the world’s focus as to which country, specifically, has rendered that system unsustainable.
Fast-forward to Monday, which brought us a letter to the EU Commission from Friedrich Merz and Emmanuel Macron. From Bloomberg:
Germany and France are urging the European Union to adopt new powers that would enable the bloc to cut off access to its single market if China or other nations destabilize trade relations.
The suggestion came in a letter, seen by Bloomberg News, sent Monday to European Commission President Ursula von der Leyen, the top EU executive.
“We need a credible instrument in the hands of the Commission to allow for decisive and systemic reaction,” the letter reads, suggesting “powerful measures up to an immediate cut-off from the internal market if needed.” […]
German officials, speaking anonymously in line with government protocol, said the market-access tool should be seen as a second strike weapon in an all-out trade war with a country like China. It could be deployed, for instance, if China blocked all exports of rare earth materials, which the EU relies on to build modern technologies.
As former Biden NSC staffer Rush Doshi wrote on Twitter, “When Beijing weaponized rare earths in October 2025, many in the Trump administration considered ‘escalating to deescalate’ by targeting Chinese banks, software exports, and SME exports. Trump decided against it. Almost exactly a year later, Europe is building its own escalatory capacity.”
So what’s happening here? Well first of all, nothing. The letter from Merz and Macron is a first step toward developing meaningful tools to counter abusive Beijing tactics, but no change has been voted on or even formally proposed by the EU, and there’s a long way to go between here and there.
That qualifier aside, as I wrote about at length in June, the European continent’s critical industries and employment bases are all getting absolutely hammered by Chinese exports. A conflict is structurally inevitable. China can’t shut off its export engine and can’t afford to allow Europe to set a precedent with trade barriers, while Europe’s trade deficit with China widens by about 1 billion euros per day. EU Commission President Ursula von der Leyen has emphasized the bloc intends to take corrective action. “Let me be clear,” she said in September, “we will use all the tools at our disposal to rebalance our relationship. Words are good. But deeds are better.”
Germany, arguably the most powerful EU country and one that had traditionally been a bulwark against decisive actions on China, has now pivoted to pushing for several protectionist tools that protect European jobs and industries (some of which mirror policies that protect China’s domestic market), as well as a tool—the “kill switch”—that would allow the EU to instantly restrict all Chinese exports to the EU market in the event that China retaliates by restricting rare earths or imposing other draconian sanctions.
As to the latter tool, with the caveat that all of this is very much in flux, Noah Barkin’s excellent Watching China in Europe newsletter provides more details on the shape this might take if new measures are indeed passed:
The official said the technicalities of how to construct the instrument, which could mirror US Section 301 tariff authorities, would be left to the Commission. One option would be to rework the Anti-Coercion Instrument (ACI) in order to lower the bar for its deployment. This could be achieved faster than developing a new tool from scratch. The ACI, which has not been used since its creation nearly three years ago, cannot be triggered unless a “positive” qualified majority of member states back its use—a very high bar. Germany and France want to lower the threshold for using such an instrument by requiring a “negative” qualified majority of member states to block it. That would reduce the risk of Beijing dividing EU member states through a mix of economic threats and promises of investment.
Now will the Europeans actually put these mechanisms in place? If you’re looking for reasons to bet against dramatic reform and decisive action, it’s easy to notice potentially mitigating factors like violent political instability in multiple European countries, a looming energy crisis, and a long history of fiery Brussels rhetoric that precedes incrementalist half-measures. On the other hand, I’m reminded of news this summer where the Europeans were investigating Chinese retail giant JD.com under the bloc’s anti-subsidies regulation, and the Chinese Ministry of Commerce forbade the company from cooperating with the investigation and chided the Europeans for “demanding extensive and unnecessary information about China from the Chinese entity.” If the EU can’t enforce its own laws against foreign companies doing business there, what recourse is left but unilateral, sector-wide action?
On Wednesday this week, the EU’s trade chief Maros Sefcovic asked his Chinese counterpart to voluntarily cap the export of plug-in hybrid vehicles exported to the continent, and China rejected his request. That’s notable as an indication that even a modest concession in furtherance of cooling tensions is either unacceptable to Beijing as a matter of precedent, or untenable from an economic perspective. Either way, Bloomberg reported that the EU now plans to move forward with “safeguard measures that would limit imports of Chinese hybrid vehicles into the bloc” and “plans to use hybrids as a test case, which, if successful, could be replicated with other sectors where the bloc sees trade imbalances.” (Friday AM Update: Sefcovic announced a deal to halve imports of Chinese hybrids over four years, and called it a “first step” toward rebalancing.)
However this ends, the EU is by far the largest export market for a country that is more export-dependent than any major economy in the history of the world. And this is a sensitive time for China, generally. Xi is expected to secure an unprecedented fourth term at the 21st Party Congress in November 2027, but the entire system will be on high alert in the interim. On the ground, meanwhile, without completely shifting our focus to the state of the Chinese economy in 2026, I suggest that everyone finish reading here and then listen to Rhodium’s Logan Wright on last week’s episode of China Talk. In short: Youth unemployment is rampant, Beijing is entirely dependent on external demand for the growth of its own economy, the official growth statistics have been grossly exaggerated and may be masking contraction, hundreds of banks are closing, and it’s not clear that top leaders are making decisions with a full grasp of the facts and their implications. Nor is it clear that those leaders have viable options to solve the country’s problems, even if they do have accurate information and political room to maneuver.
In other words, if Europe is crafting protectionist policies that will complicate Beijing’s market access, it will further strain an economy that’s already under a great deal of duress. And if Europe is mooting a “kill switch” mechanism that would shut off Chinese market access altogether in the event of reprisal from Beijing, that should not be read as a goal of EU policymakers so much as an indication of their seriousness about making these changes and protecting their own economies. These European responses would likely take another year before they are passed and put into play, but again, the pressure is not going away. While U.S. imports from China have fallen to 20-year lows, European pain at the hands of Chinese trade is a story producing fresh headlines every week.
Speaking of the U.S., though, Barkin ended his most recent newsletter with the following observation:
It is a cruel twist of fate that the EU is getting serious about China just as the United States is pivoting in the opposite direction. Instead of taking advantage of the new mood in Europe to build a common front against America’s main geopolitical rival, the Trump administration is picking fights with Brussels over diesel, drugs and digital, while cozying up to Beijing and Moscow — without receiving anything in return. This is not super intelligence, Trump’s favorite new term. It looks more like super ineptitude. Trump’s fawning over Xi Jinping last week in Washington felt like visual confirmation in real-time of the Chinese leader’s prophecy of US decline.
Lest there be any confusion about who’s serious, it was at least in part U.S. trade barriers that led to the European continent being flooded with Chinese goods, just as it was the crushing U.S. tariffs throughout 2025 that forced Beijing into threatening to restrict the flow of rare earths to the entire Western world. That move worked to secure short-term tariff relief for Xi, but as I noted a year ago, it may have permanently cost Beijing the benefit of the doubt among the developed economies that Beijing needs to sustain its economy. Meanwhile, if Europe is now ready to confront economic and security risks posed by China—we’ll see—it’s fair to wonder how much of this progress would have materialized in a world without the United States applying pressure to Beijing for the past two years. It’s also fair to note that Europe is now rallying to implement policies that Trump implemented 10 years ago.
Two-Dimensional Chess
All of that background activity should be considered context for Trump greeting Xi personally when he landed at Andrews Air Force base two weeks ago. That was the first time in more than 60 years that a U.S. president had welcomed a foreign leader at an airfield, let alone a foreign adversary. The scene included a 100-foot red carpet (red carpet length is symbolically important to Chinese leadership), and as Barkin notes, the rest of the visit followed a similar pattern of over-the-top pageantry, gifts, and flattery. Among other things, Xi, who’s been dogged by rumors of physical decline, got a stellar bill of health from Dr. Trump:
To the extent this sort of display is confusing and disappointing to anyone who sees Xi as a brutal authoritarian dictator who should not be celebrated by Western leaders under any circumstances, I get it. I would counter, though, that a truly stunning number of smart people in Washington D.C. make the mistake of reading Trump’s behavior as sincere. I’d add that many of the folks excoriating Trump had their own ideas about managing China that turned out to be naive, wrong and awfully destructive. (Some, to be fair, were limited by superiors like John Kerry, who really wanted Xi to sign onto the Paris Climate Agreement and therefore halted weapons sales to Taiwan for nearly a full four years, while China militarized the South China Sea in plain sight.)
Speaking of bad ideas: the keystone to understanding America’s current approach to China is to keep in mind that Trump spent his entire first administration publicly negotiating an omnibus trade deal with Beijing that did not achieve any of its intended goals. The failure was comprehensive. The Chinese economy did not rebalance toward consumption-led growth, Beijing did not fulfill the purchase commitments agreed to in that deal, and Trump’s first term ended with a lab leak in Wuhan that he believes cost him a re-election in 2020. By the time Trump had taken office a second time, Chinese trade was eating the entire world, the PLA had dramatically increased and intensified its Taiwan exercises, and PLA-aligned hackers had successfully breached 1) several branches of the federal government; 2) critical infrastructure across the United States; and 3) several American cellular networks. In fact, China may have hacked Trump and J.D. Vance personally.
So yes, contrary to reports, I would imagine that Trump understands China is a security threat. Incidentally, PLA exercises around Taiwan have been dramatically reduced so far this year. (Cue a Wall Street Journal headline: Is Xi going soft on the United States?)
In general, it’s fairly obvious that the foremost foreign policy priority of the current administration has been to counter China’s rise and blunt Beijing’s ability to interfere with U.S. interests. It’s not been perfect; the administration completely ignored a federal law banning TikTok (another north star of this administration is, uh, donor relations and open graft), they’ve been all over the place on chips and chipmaking equipment, and a variety of ominous supply chain dependencies remain largely unaddressed. That said, and as I’ve written elsewhere, the administration has successfully applied pressure to the Chinese economy and complicated China’s trade relationships elsewhere in the world. Rather than attacking appendages, the target there is the heart. When Scott Bessent engineered a 19-1 vote at the G20 meeting in August, that wasn’t an accident.
Likewise, the U.S. has removed PRC chokepoints throughout the Western Hemisphere, and has worked to acquire chokepoints of its own. Countering China is never the only animating principle for this administration’s decisions, but it’s always one of them: on tariffs, on routers, on rare earths, on robots and power inverters; in Greenland, in Venezuela, in Panama, in Mexico, in Egypt, and yes, in Iran.
As to Asia, unlike President Biden, Trump has been surprisingly disciplined in his commitment to maintaining strategic ambiguity with respect to defending Taiwan with force. Occasionally, though, he’ll tell the truth. “You know,” the President said in May, “I think the last thing we need right now is a war that’s 9,500 miles away.”
Indeed, the goal is not to win a war in Taiwan, but to delay a conflict by making clear to the CCP that fighting a war in Taiwan would mean committing economic and potentially political suicide. To that end, as the EU Commission moots a “China kill switch,” it’s worth considering that the threat of deploying such a mechanism may not only be used in response to trade policy. As for the U.S., this plan may not succeed, but it’s not particularly complicated, and a parallel goal is to work toward these structural changes with minimal harm to the American economy in the meantime.
Methods and Madness
Approaching the two year anniversary of his election and one year writing about this administration’s China policies, let me add at the end that covering the U.S.-China relationship under Trump is very funny. Everyone, on all sides, is constantly upset. China hawks on the right are disappointed with Trump for not further antagonizing Xi in a dozen different ways and risking, if not outright war, then the sort of removal of pretenses that would demand a Beijing policy response and likely have consequences for every American. In the eyes of the hawks, the U.S. should be banning every last chip sale to Beijing, ejecting every Chinese student from American colleges, de-listing PRC firms from American stock exchanges, warning U.S. citizens about travel to China, etc. On the left, a combination of political incentives and a constitutional inability to consider the possibility that Trump is good at foreign policy have led many to discount real progress over the past two years. Instead, they frame Trump as a blundering idiot who’s enthralled by Xi personally, and liable to sell out American or allied interests at any time.
No one seems to account for a third scenario in which the U.S. has set in motion a global pressure campaign that will alternately undermine Chinese growth and reduce Chinese leverage in the event of a military conflict, and—this is the important part—the administration is now managing the consequences of that aggression by picking its battles and publicly treating China more like a peer than an adversary. Or, to put this in sports terms: a friend explained to me recently that the U.S. is like a boxer protecting himself while delivering body blows and causing damage that’s not immediately visible, but will compound as the rounds continue. Critics, meanwhile, keep asking whether the U.S. is even fighting because they’re not swinging for China’s chin. And Trump, of course, is spending the entire time marveling at what a fantastic fighter Xi Jinping is.
The last part is absurd and may not sustain, but it’s been entertaining while it lasts. As for what’s next, in the days before Xi’s trip to D.C., Chinese negotiators sought to extend the current bilateral trade truce by 2.5 years, which would have covered the remainder of Trump’s term. At the World Bank, about 20 miles away from the 100-foot red carpet at Andrews Air Force Base, Scott Bessent agreed to two months. He also teased the possibility of a bigger deal in the future.
And wouldn’t it be great if Beijing believes him?
Sharp Text is extension of the Stratechery Plus podcasts Sharp Tech, Greatest of All Talk, and Sharp China. To subscribe and receive weekly posts via email, click here.