Europe’s Two-Front Economic War: Trump’s Tariffs Distract from the Real Threat China

Economic

Summary:

While Europe braces itself against Donald Trump’s renewed tariff barrage, the more profound and systemic threat comes from China’s aggressive economic tactics

A Fragile Alliance Fractures

Ambrose Evans-Pritchard argues that Donald Trump’s escalating trade war with Europe centered on 15% tariffs and punitive duties on key sectors like steel, aluminum, and pharmaceuticals has dominated headlines but diverted attention from a deeper and more existential threat: China. European leaders, still reeling from Trump’s protectionist posture, have failed to appreciate that Xi Jinping has decisively ended any notion of a collaborative front with the EU against U.S. trade aggression.

While European leaders like Antonio Costa and Ursula von der Leyen attempt to preserve diplomatic facades, relations with China have reached a post-Cold War low. China’s latest export onslaught, built upon suppressed wages and a heavily manipulated exchange rate, resembles not strategic competitiveness but systemic dumping threatening Europe’s industrial heartland.

The China Shock 2.0: A Slow Economic Strangulation

The new wave of Chinese economic coercion termed “China Shock 2.0” is proving more severe than its predecessor from the early 2000s. Back then, Chinese goods spurred global deflation and income inequality; now, as China faces its own post-bubble slump, it offloads vast excess capacity abroad, intensifying its trade surplus with the EU, which soared to €305 billion in 2024 and is still rising.

This surge is underpinned by a 30% depreciation in China’s real effective exchange rate against the euro since 2022, facilitated through veiled interventions and state-led currency suppression. Such policies amplify the competitiveness of Chinese exports artificially, leaving European industries unable to respond through normal market mechanisms.

Oxford’s George Magnus warns that this time, the threat is existential. Europe’s core industrial capacity automotive, technology, machinery is at risk. German economic interests, long accused of aligning too closely with China, are now confronting the fallout of their Faustian bargain.

Trump’s Distraction, Xi’s Opportunity

Amid this crisis, Donald Trump’s policies exacerbate Europe’s vulnerability. While the EU grapples with calibrated tariffs on Chinese electric vehicles and rare-earth dependence, it simultaneously contends with Trump’s trade deal demands, digital tax disputes, and steel conditionalities. Trump’s unpredictability forces European leaders to divert resources and attention from China to manage their transatlantic relationship.

Strategically, this creates the worst-case scenario: a Europe distracted, divided, and dependent facing economic offensives from both allies and adversaries. Trump’s refusal to treat the West as a unified bloc, and his transactional approach to diplomacy, inadvertently serves China’s long-term goals.

As Charles Parton from the Mercator Institute notes, the CCP views global politics as an ideological struggle. China’s leadership is not merely trying to out-compete the West it is committed to undermining democratic values and pluralism. In this context, Trump becomes, in Evans-Pritchard’s words, “Xi Jinping’s useful idiot” his tariff crusade splinters Western solidarity at a time when unity is essential.

Europe’s Dilemma: Industrial Decline or Strategic Awakening?

The EU’s attempts to “de-risk” from China through mild tariffs and symbolic diversification have thus far been ineffective. As Beijing weaponizes its grip on rare earths and uses global supply chains to retaliate against any pushback, Europe is discovering the true cost of its economic dependencies.

Markets may remain optimistic about a European economic rebound, fueled by military-Keynesian spending and NATO defense budgets. Yet unless Europe fundamentally rethinks its trade exposure and industrial policy, that optimism may give way to disappointment. The EU faces the very real prospect of a second “lost decade” a period of economic stagnation, technological erosion, and geopolitical irrelevance.

Evans-Pritchard’s final indictment is clear: China poses a civilizational challenge, not just a commercial one. And in failing to recognize this distracted by Trump’s drama and seduced by past illusions of global integration Europe risks losing more than economic strength. It risks its strategic autonomy. In this battle, tactical diplomacy will not suffice. Only bold, unified, and forward-looking economic strategy can secure Europe’s future.

Source: The Telegraph

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Trade Diplomacy Amid Golf and Ceremony

President Trump’s visit to Scotland, where he is scheduled to tour his golf resorts in Turnberry and Aberdeen, also doubles as a venue for delicate trade negotiations with the U.K. The informal talks with Prime Minister Starmer are expected to address lingering elements of the new U.S.-U.K. trade framework, which provisionally took effect on June 30.

While the current deal outlines a 10% baseline tariff on British exports to the U.S., it includes exemptions and quotas for sectors like autos and aerospace. However, some key elements remain provisional. Chief among these is the removal of the 25% tariff on U.K. steel and aluminum, which Washington has tied to ensuring that imported British steel is “melted and poured” domestically a condition aimed at preventing indirect imports of Chinese-origin materials.

Digital Services Tax: A Sticking Point

Another unresolved issue is the U.K.’s digital services tax, which applies to revenue generated by large tech firms operating in the country regardless of their physical location. Washington has long criticized this levy, arguing it disproportionately targets American tech giants. The Trump administration views the tax’s repeal as a condition for further tariff relief and has linked it to ongoing trade negotiations.

According to White House Press Secretary Karoline Leavitt, the leaders will meet “to refine” the current deal and potentially advance these stalled provisions. Though the terms are far from finalized, the meeting may yield headline announcements that symbolize progress, even if the substantive gains are modest.

A Pragmatic Partnership

Despite their ideological differences Trump being a Republican and Starmer leading a center-left government both leaders appear to share a pragmatic rapport. At the recent G7 summit in Canada, their friendly demeanor drew attention, especially when Trump assured reporters that the U.K. was "very well protected" from further tariffs “because I like them.”

This tone of personal diplomacy, coupled with the urgency created by the August 1 trade deadline, gives analysts reason to believe that incremental concessions may be reached. Kallum Pickering, chief economist at Peel Hunt, noted that a compromise could involve the U.S. relaxing tariffs in exchange for U.K. movement on the digital tax a classic “give and take” scenario.

Strategic Implications and the Road Ahead

In the broader context of global trade friction and protectionism, the U.S.-U.K. pact though not widely celebrated for its scope offers stability and mutual benefit. The U.K., having already secured a promising deal with India, is eager to demonstrate its global trade agility post-Brexit. Trump, on the other hand, is keen to showcase his ability to protect American interests while maintaining alliances with key partners.

Following this Scotland visit, the momentum may carry into Trump’s upcoming state visit to the U.K. in mid-September, where further discussions with the monarchy and policymakers are planned. Until then, eyes remain on whether this week’s informal golf-course diplomacy can settle the outstanding issues particularly in steel, aluminum, and digital taxation before the looming August trade adjustment deadline.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Winkelmann

Cryptocurrency

Forex

The options expiry on Deribit may add to the price pressure for BTC. The leading coin traded at $115,549.15, pressured closer to the level of maximum pain at $112,000.

Deribit announced a total of $15.45B in options, down from June’s $17B. The monthly event is still considered significant, as the crypto market has not experienced a summer slump.

The BTC options expiring have a notional value of $12.66B, while ETH expects a $2.75B expiry event.

Monthly BTC And ETH Options Are Expiring Today_1

While ETH maximum pain price at $2,800 is less probable, BTC may see last-minute pressure. For the past few months, both BTC and ETH have expired above their options maximum pain price.The put/call ratio signals a more moderate stance, though still retaining a bullish trend. Deribit has seen a faster accumulation of open interest, already building up over $37B for the quarter to date. At the end of Q2, the open interest at expiry was just $35B.

BTC still trades in greed territory, with an index of 67. However, this does not preclude short-term price moves. Overall BTC volatility is near an all-time low, though the price still fluctuates between key levels. The BTC volatility index is down to 1.27%, with a brief spike during the July rally.

BTC expects dip on extended long liquidations

BTC may easily dip to the $114,000 range, where an accumulation of short positions may trigger an attack. Despite this, BTC retains its bullish factors, with a new accumulation of short positions all the way to $119,000.Despite the complex trading, the end of the month has historically performed as a good entry point. BTC still expects a breakout to a new price range, despite temporary setbacks.

ETH retains the $3,600 range, though the token saw the largest share of long liquidations in the past 24 hours. ETH is traded with more exuberance, with signs of being overheated. The market dominance of ETH expanded to 11.4% as more traders switched their attention, while BTC dominance sank to 59.6%.

BTC and ETH had a drawdown mostly driven by long liquidations, ahead of the monthly options expiry. | Source: CoingGlass.

In the past 24 hours, ETH was a leader of liquidations, with $152.13M in predominantly long positions. BTC saw $152.04M in long positions liquidated.

BTC falls on signs of whale selling

BTC also faces added pressure from spot selling. Despite the general accumulation trend, in the short term some whales are sending their coins to exchanges.Galaxy Digital, one of the intermediaries for both retail and institutional traders, has sent 11,910 BTC to multiple exchanges.

Monthly BTC And ETH Options Are Expiring Today_3

The crypto service provider also kept sending a few hundred BTC to Bybit and Bitstamp.

The spot sales originating from the Galaxy Digital wallet follows a recent reawakening of a wallet from 2011. The wallet moved 3,962 BTC, after making a test transaction. The old whale wallet received the typical messages of proving coin ownership, which have made other whales move their coins to new addresses and split them to avoid easy tracking.

Source: CryptoSlate

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

A Transformative Trade Accord

The U.K.–India Free Trade Agreement marks the most significant bilateral trade deal for the U.K. since Brexit and India’s first FTA with a developed economy outside Asia. Signed on July 24, 2025, the agreement is the result of three years of negotiation, culminating in tariff reductions across key sectors such as textiles, automobiles, alcohol, and agricultural products. British exports to India will face an average tariff of just 3%, down from 15%, while 99% of Indian exports to the U.K. will now be tariff-free.

Economists from ANZ and Citi Bank point to the deal’s strategic implications. India’s exports of textiles, jewelry, and machinery, previously burdened by high tariffs, will gain better access to the U.K. market. Conversely, the U.K. gains entry into one of the world’s fastest-growing consumer markets, particularly for luxury goods like Scotch whisky, gin, and automobiles areas previously constrained by duties as high as 150%.

Structural Benefits and Sectoral Gains

The FTA promises dual benefits: lifting trade volumes and supporting employment and industrial growth in India. By lowering duties on high-tariff categories such as liquor, which will gradually fall to 40% from 150%, and automobile imports, which will see a reduction to 10% within five years, British exporters will become more competitive in the Indian market. For Indian exporters, the removal of tariffs on textiles and gems is expected to drive significant volume increases and job creation.

The U.K. government estimates the deal could add £4.8 billion ($6.5 billion) to its GDP annually, a modest but meaningful addition to its £2.85 trillion economy. For India, the deal is seen not only as an economic win but a diplomatic one. With U.K. accounting for just 3% of India’s total trade, the agreement’s importance lies more in the market signal it sends than immediate gains.

Global Implications and Trade Leverage

Analysts suggest the agreement may shift the balance of future trade negotiations. With the U.S. raising tariffs and erecting barriers on tech and industrial goods, both the U.K. and India stand to benefit from diversifying trade ties. Natixis economist Alicia Garcia Herrero notes that the pact gives both countries “leverage versus the U.S.” as they seek more favorable terms in ongoing and upcoming talks.

For India, this deal strengthens Modi’s broader effort to position the country as a manufacturing and trade alternative to China. The FTA’s provisions especially the exemption of Indian temporary workers from social security contributions for three years also support cross-border labor mobility and signal India’s willingness to align with global market standards.

Outlook and Ratification Challenges

Though the agreement must still be ratified by both parliaments, a process expected to take several months, political consensus in both countries suggests minimal resistance. However, the real test will lie in implementation. Questions remain about how quickly businesses can adapt to the new trade framework and whether regulatory adjustments especially in the automotive and alcohol sectors can keep pace.

India’s trade surplus with the U.K., which has widened in recent years, may initially grow before narrowing as British exports scale up. Yet, as ANZ economist Dhiraj Nim notes, while the direction of the trade balance is uncertain, “overall trade volume is certain to rise.”

In essence, the U.K.–India FTA is more than a bilateral accord; it is a strategic realignment that underscores a growing trend: mid-sized powers forging ambitious, independent trade paths amidst an era of global fragmentation.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Blue River

Forex

Technical Analysis

Economic

The EURUSD rate corrected towards the 1.1730 area following the ECB's decision to keep interest rates unchanged. The market awaits the outcome of trade agreement negotiations between the US and the EU. Find out more in our analysis for 25 July 2025.

EURUSD forecast: key trading points

● Market focus: the ECB left the benchmark interest rate unchanged at 2.15%

● Current trend: correcting downwards

● EURUSD forecast for 25 July 2025: 1.1700 or 1.1830

Fundamental analysis

At yesterday’s meeting, the European Central Bank left key interest rates unchanged after eight cuts in the current cycle. The regulator noted that disinflation has progressed in line with expectations since the previous meeting in June.

ECB President Christine Lagarde stated that a more detailed assessment of the need for further rate cuts this year will require more economic data and clarity on the conditions of a potential trade agreement with the US.

Meanwhile, reports suggest that the US may agree to reduce tariffs on EU goods to 15% (the lower limit for duties on other countries) as part of an ongoing trade agreement actively being negotiated by EU diplomats.

EURUSD technical analysis

On the H4 chart, EURUSD is undergoing a downward correction, falling this morning to the 1.1730 area, with further decline towards the 1.1700 support level possible. The daily trend for the pair remains upward, so after the correction ends, the rally may continue.

The short-term EURUSD forecast suggests a further decline towards 1.1700 in the near term if bears keep the price below 1.1760. However, if bulls push the pair above 1.1760, growth may resume towards the 1.1830 resistance level.

EURUSD Declines After ECB Decision_1

Summary

The EURUSD pair corrected to the 1.1730 area following the ECB’s decision to leave rates unchanged. The market’s focus now turns to trade negotiations between the US and the EU.

Source: RoboForex

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Glendon

Economic

Forex

UK retail sales partially bounced back in June as Britons basked in heat wave conditions, adding to signs that the economy recovered from back-to-back monthly contractions during the spring.

The volume of goods sold online and in shops climbed 0.9% after plunging 2.8% in May, the Office for National Statistics said on Friday. The increase was slightly below the 1.2% gain expected by economists.

Stronger sales and an uptick in business surveys suggest the UK economy stabilized after GDP fell in both April and May amid the double blow of Labour’s tax rises and President Donald Trump’s US tariffs.

Last month was the second-hottest June on record for the UK as temperatures soared above 30 degrees Celsius in parts of England, prompting consumers to splash out on food and summer clothing.

While the boost will be welcomed by Chancellor of the Exchequer Rachel Reeves, it will do little to prevent a sharp economic slowdown in the second quarter from the bumper growth at the start of 2025. Retail sales rose just 0.2% over the quarter, contributing 0.01 percentage point to GDP, the statistics office said.

There were more ominous signs from GfK’s consumer confidence survey for July published earlier Friday. It showed that UK households are more inclined to save than at any point since the run-up to the financial crisis.

The highest unemployment rate in over four years and rising inflation may prompt already cautious consumers to slam the brakes on spending in the coming months. GfK also pointed to growing speculation that Reeves will need to raise taxes further to shore up the finances.

A cautious consumer has held back the UK economy in recent years with saving rates still well above pre-pandemic levels. Households have tightened their belts after a string of shocks to their finances, from the pandemic to double-digit inflation.

Source: Bloomberg Europe

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Thomas

Forex

Economic

ECB Policy Statement & Outlook

President Christine Lagarde struck a cautious tone, emphasizing a “wait-and-see” approachas policymakers assess risks from the ongoing U.S.–EU tariff negotiations.While inflation remains broadly aligned with the ECB’s 2% medium-term target, uncertaintysurrounding trade policy and the stronger euro continues to weigh on the outlook, this keptthe ECB to stay on a cautious sideline where cut is unlikely in upcoming meeting unlessinflation or growth data deteriorate significantly.Markets are now pricing in a lower probability of a rate cut in September.

Inflation and Trade Remains Key Consideration

June inflation rose to 2.0% y/y from 1.9% in May, with core pressures—particularly inservices and wages—remaining modest. Real income and spending data suggest theeurozone economy remains resilient for now.However, the ECB flagged elevated uncertainty over the U.S. administration’s proposed30% tariffs on European exports. Such measures, if enacted, could disrupt supply chains,dampen business confidence, and weigh on eurozone growth.Meaning to say, if the economic data and trade talks remain positive, we are unlikely to seethe ECB eases further in coming months, and even could be an end of easing cycle for now.

What’s Next for Euro?

The euro strengthened modestly following the ECB decision, with EURUSD testing 1.1750,supported in part by ongoing U.S. dollar weakness.However, it is obvious that the ECB decision does not pose major impact on the euro, therecent euro strengths largely driven by the weaker dollar.

ECB Holds Rates Steady, Signals Pause in Easing Cycle;What's Next on Euro?_1

EURUSD: Support on 1.1600,EURUSD – Daily Chart

From the technical perspective, EURUSD rebounded from the 1.1600 support zone earlierthis week and extended gains post-meeting.The short-term outlook remains constructive, but the pair faces potential resistance near1.1800 ahead of the August 1 U.S.–EU tariff deadline. Sentiment could shift quickly if tradetensions escalate.

ECB Holds Rates Steady, Signals Pause in Easing Cycle;What's Next on Euro?_2

EURJPY: Uptrend Intact, But Cautious on Momentum Loss,EURJPY – Daily Chart

Meanwhile, EURJPY remains on a strong upward trajectory, extending its winning streak tonine consecutive weeks.However, the latest weekly candlestick may shows early signs of exhaustion, potentiallyforming a Harami pattern—a classic indication of a possible momentum slowdown,especially as the pair tests a major resistance zone.

ECB Holds Rates Steady, Signals Pause in Easing Cycle;What's Next on Euro?_3

EURJPY – 4H Chart

Despite the hesitation on the higher timeframe, the short-term trend still shows no clearsigns of reversal. The pair is currently consolidating within a defined range between 171.20and 173.00. A sustained breakout above 173.00 could open the door for another leg higher.On the downside, a confirmed break below 171.20 support may signal the start of acorrective phase, with traders potentially shifting toward a more cautious stance.

Outlook on the Euro

The ECB has adopted a wait-and-see approach, opting to keep policy firmly data-dependentas it awaits greater clarity on the evolving trade landscape. With eurozone inflation anchoredaround target and economic activity showing resilience, the central bank appears in noimmediate rush to pursue further easing.However, external risks remain elevated—particularly the threat of renewed U.S.–EU tradetensions. Any escalation on this front could quickly revive market volatility and place freshpressure on policy outlooks.At this stage, euro strength is largely driven by U.S. dollar softness, as capital flows rotateaway from the greenback into the euro. Nonetheless, markets remain highly sensitive toshifts in trade headlines or inflation surprises, which could reshape the policy narrativeahead.