Allianz Trade: EU increasingly caught between US and China

EU Faces Growing Pressure Between US and China, Allianz Trade Reports

Allianz Trade, a global leader in trade credit insurance, has released an analysis indicating that the European Union is increasingly caught between the strategic interests of the United States and China. The report highlights that intensifying global tensions and trade fragmentation are creating a vulnerable position for the EU.

Belgium, a small and open economy heavily reliant on exports, is particularly susceptible to these geopolitical shifts. Johan Geeroms, Director Risk Underwriting Benelux at Allianz Trade, noted that potential trade wars and proposed US import tariffs could significantly impact Belgium's export earnings. The analysis suggests that in a "quasi-trade war" scenario, Belgian export revenues could fall by $2.6 billion for the 2025-2026 period, with a more extreme scenario projecting losses of up to $8.6 billion. Such outcomes could lead to job losses and increased budget deficits.

The report criticizes the EU's lack of a cohesive industrial policy, which exacerbates its vulnerability in key sectors like battery manufacturing, where Chinese and Asian suppliers dominate. Aligning too closely with the US strategy is shown to inflict greater economic damage on the European economy than benefit it. The analysis suggests that the EU's internal divisions and hesitant approach towards China make it susceptible to a "divide and conquer" strategy by the superpowers.

Global trade growth is also expected to be impacted. The potential introduction of US tariffs could reduce global nominal trade growth by 0.6 percentage points in 2026. Both China and the EU are projected to bear significant costs, with threatened export values estimated at approximately $67 billion for 2025-2026, particularly affecting the automotive, transport equipment, and metals sectors.