President Donald Trump’s suspension of most tariffs on European products and the European Union’s postponement of threatened retaliation has bought a three-month truce in a potential trans-Atlantic trade war. While this is a welcome reprieve, the possible resumption of debilitating duties by June threatens to distract Washington and Brussels from the work they need to do together in the face of the challenge they both share: China. 

As Treasury Secretary Scott Bessent suggested, speaking at an American Bankers Association conference in the wake of Trump’s tariff suspension, the U.S. “can probably reach a deal with our allies” and then “approach China as a group.” This is an excellent idea. All crises bring opportunities, and this is an opportunity for trans-Atlantic solidarity that should not be squandered.

The most obvious opportunity for U.S.-EU cooperation is self-defense against Chinese market dominance in electric vehicles and its looming competitiveness in commercial aircraft. Both are the product of prolonged, extensive Chinese government support. Such backing has distorted global markets, harming both American and European companies and workers.

The EU has imposed EV duties that range from 17 percent to 35 percent, depending on the Chinese manufacturer, on top of the existing 10 percent EU tariff on all imported vehicles. The Biden administration imposed a 100 percent tariff on Chinese EVs, and the Trump administration has continued that. Unless Washington and Brussels can agree on a mutually reinforcing EV strategy, Beijing will simply exploit the differences.

The Trump administration and the EU need an approach to Chinese EVs that counters the unfairness of Beijing’s subsidies while maximizing automaking employment in both Europe and the U.S. To that end, the EU should raise its EV tariffs to the prohibitive level now set by the Trump administration. Then Washington and Brussels should agree to open their markets to Chinese firms willing to build EV factories and create jobs in the United States and Europe.

To ensure that Chinese EV makers meet U.S. and EU security standards, both Washington and the EU member states that have foreign investment screening mechanisms could impose parallel requirements on Chinese EV manufacturing investments. 

The U.S. already has a rule that prohibits the sale or importation of vehicles if they contain specific pieces of hardware and software with links to China. The EU has broad limitations on any company collecting data and shipping it abroad. Washington and Brussels should come up with comparable rules limiting the ability of Chinese entities to access or process data generated by EVs, require encryption, data anonymization, and that EV data be stored and processed within the EU and U.S., respectively.

The U.S. and Europe share a similar challenge posed by Chinese subsidies of Beijing’s nascent commercial aircraft industry.

The U.S.-based Boeing and Europe’s Airbus have been involved in a two-decade-old finger-pointing dispute over who benefits more from impermissible government subsidies. In 2021, the EU and the U.S. agreed to suspend for five years tariffs they had imposed on each other in this dispute. That suspension ends in 2026. 

Washington and Brussels also agreed to “confront the threat we face from China’s ambitions to build a sector upon non-market practices.” If anything, that threat is greater today than it was in 2021. 

Beijing intends to be a player in the international commercial aircraft business. It has ploughed up to $72 billion into state-owned Comac to develop the 168-seat, narrow-bodied C919 airplane, a potential rival to Airbus’ A320 and Boeing’s B737, money-makers for the two trans-Atlantic firms. In 2024, Comac delivered a modest 12 C919 aircraft to three state-owned airlines. The company hopes to deliver 30 planes this year, and it expects annual production capacity to reach 150 in five years. 

Both the EU and the U.S. have a self-interest in ensuring that Boeing and Airbus sales are not undercut by subsidized Chinese aircraft. 

Washington and Brussels need to resolve their long-running Boeing-Airbus subsidy dispute, or, at the very least, extend their current truce on the issue. They then need to come up with a common front against subsidized Chinese aircraft sales. 

Comac’s initial sales will be in third-country markets, not to European or American airlines. Countering Chinese subsidies may require going after the airlines that purchase their jets and want to use them to service the EU and U.S. markets. This will be controversial. But a failure to act could doom the future Boeing and Airbus exports. 

The emerging trade war between the U.S. and the EU will have many casualties. Cooperation in dealing with the mutual challenge posed by China should not be one of them. 

Bruce Stokes is a visiting senior fellow at the German Marshall Fund.