Talk vs. tariffs: Two strategies to tackle Donald Trump

As US President-elect Donald Trump prepares to return to the White House, leaders in the world’s two largest trading blocs — China and the EU — are revealing their starkly different strategies for dealing with his “America First” trade policies.

In Europe, Friedrich Merz, the German opposition leader and leading contender for chancellor in next month’s national elections, is advocating for the negotiation ofan EU–US free trade agreement. Instead of retaliatory tariffs, Merz argues the EU should reignite its competitiveness, starting with lower taxes, and then tell the Americans: “Yes, we are prepared to face this competition with you, too.”

“This competition,” of course, includes China, which is taking a polar opposite approach anddoubling down on its trade war with the US. This week, Beijing added 28 American defense-related companies, including Raytheon, Boeing Defense, and Lockheed Martin, to its export control list, effectively banning exports of dual-use items. The move coincides with a ban on rare earth minerals to the US to “safeguard national security and interests.”

What both Bonn and Beijing agree on, however, is the need to act before Trump takes office — and in Merz’s case, before he does as well. We’ll be watching for the follow-through — and whether talk or tariffs proves the more successful strategy.