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Bilateral damage

Stanley Pignal: European business correspondent, The Economist, PARIS

European businesses once hoped to benefit from squabbles between China and
America. No longer

Europe’s approach to China as a trade partner has hardened

TRADE WARS are generally bad news for companies in any of the countries involved.
But might they throw up benefits for those lurking on the sidelines? That was the hope
of some European firms in recent years as Donald Trump stepped up America’s trade
war with China. But this approach has failed to deliver the expected benefits—and in
2021 its drawbacks will become more apparent.

Europe’s hope was that Chinese and American companies, unable to buy from each
other as trade tempers flared, might turn to European firms instead. A UN study in 2019
forecast that Europe would pick up $70bn of fresh exports a year as trade patterns
moved in its favour, largely from Chinese firms needing new suppliers. A geopolitical tiff
in 2020 kicked up a tangible example: when the Trump administration placed sanctions
on Huawei, a Chinese maker of telecoms equipment, American operators (and many