JUNE 27 — With the July 9 deadline for a breakthrough transatlantic trade deal fast approaching, quiet recalibrations are already underway in Brussels.
Gone is the rigid insistence on securing zero-per cent tariffs with Washington across the board. Instead, European officials are now signalling that they may accept a 10 per cent baseline tariff as the new normal in their negotiations with a returning Trump administration.
As President Emmanuel Macron affirmed: “A ten is still a ten.” In other words, it is better to handle a US tariff of ten per cent by July 9, rather than butting head with the Trump is for a complete zero perfect tariff.
For many in the European Commission and key member states like France and Germany, this shift represents a calculated retreat from idealism in favour of strategic realism, for now.
The goal is no longer perfect parity—but preferential predictability. If a 10 per cent tariff averts a full-blown trade war and preserves access to American markets for the EU’s high-end manufacturers, especially in autos, chemicals, and green tech, then it may be the best bargain they can extract under the circumstances.
This thinking was encapsulated by Lithuania’s President Gitanas Nausėda, who stated that the EU could at most “hope to be treated like the United Kingdom.”
In other words, a bespoke, asymmetrical arrangement with moderate trade-offs is now being viewed not as failure, but as strategic hedging in a world of fast-shifting economic power dynamics.
Rather than viewing Donald J. Trump’s potential return to the White House as a catastrophe for transatlantic relations, parts of the EU are beginning to see it as a moment to reset — and even reimagine — their strategic position.
Trump may be erratic, but he is also transactional. That opens space for negotiated gains — if approached with agility, focus, and a clear-eyed view of global shifts.
One such shift — arguably the most significant yet under-discussed — is the recent rare earth agreement between the United States and China. At first glance, it appears contradictory: after all, Washington and Beijing remain locked in a broader techno-strategic rivalry, complete with sanctions, export controls, and decoupling rhetoric. But the deal reveals something deeper about the evolving nature of power: even rivals must cooperate in critical sectors.
The US-China rare earth deal: A strategic necessity
Rare earth elements — 17 obscure minerals with names like neodymium, dysprosium, and terbium — are the backbone of modern technology, from smartphones to missiles, wind turbines to EV motors. For years, China has maintained a near-monopoly over their mining and processing, controlling over 69 per cent of global supply. This strategic dominance has long worried US officials, especially as green and defence technologies escalate in both importance and demand.
Against this backdrop, the United States has moved to secure a limited but crucial agreement with China: Beijing will guarantee stable exports of rare earths and certain value-added materials to American industries under a supervised, traceable regime. In return, Washington has agreed to temporarily relax specific export restrictions on American advanced mining equipment and allow non-dual-use technology exchanges in the sector.
This deal — quietly negotiated between mid-level envoys in Geneva and Singapore over the past six months — is not a truce in the broader US-China contest. Rather, it is a strategic compartmentalisation, allowing both powers to secure mutual interests in one domain while continuing to compete in others.
For Europe, however, the implications are profound: the two superpowers are cutting deals without Brussels at the table — and over resources that will define the 21st century.
Europe’s critical crossroads
This US-China rare earth accord exposes a structural weakness in the EU’s global positioning. Despite years of talk about “strategic autonomy,” the EU has yet to develop significant rare earth processing capacity. Projects in Sweden, Greenland, and France remain years from operational maturity. Meanwhile, the bloc’s dependency on Chinese supply remains near-total.
Even worse, the EU lacks a coherent common foreign economic policy to negotiate comparable bilateral deals. Its consensus-driven model, though admirable for democratic governance, often hinders agility in crisis response and strategic industrial decisions.
President Nausėda’s comment reflects an awareness that the EU must now negotiate from a position of limited leverage. Trump’s transactionalism may, paradoxically, offer opportunity here. If Brussels can align its interests with Washington’s emerging industrial policy — particularly around clean tech, AI, and semiconductors — it may yet secure sector-specific pacts even under a sceptical or abrasive administration.
US President Donald Trump gestures during a press conference at a Nato summit in The Hague, Netherlands June 25, 2025. — Reuters pic
A three-pronged reset for Europe
To seize this opportunity, the EU must reframe Trump’s potential presidency not as a threat but as a catalyst for strategic reset. This entails a three-pronged strategy:
1. Rebuild transatlantic trust through sectoral alignment:
Europe should identify sectors where mutual interests with the US are strong and immediate — such as rare earths, hydrogen energy, and cyber defence — and offer co-investment frameworks. A Euro-American Innovation Corridor could be one such proposal, linking industrial clusters across both sides of the Atlantic.
2. Invest in rare earth autonomy, urgently:
Brussels must expedite projects in Sweden and Greenland but also partner with African and South-east Asian countries rich in rare earth deposits. For example, with Malaysia already poised to position itself in rare earth processing in future, especially on non-radioactive separation technology with Japanese or Chinese assistance, the EU should offer co-financing, governance frameworks, and environmental best practices in Malaysia to create a non-China-aligned supply network. If EU wants to. Otherwise, EU would be lacking in any leverage with US and China separately.
3. Speak with one voice in trade negotiations:
If individual member states — especially Germany and France — pursue bilateral deals with the US, the EU’s collective weight will diminish. A unified negotiating front, supported by the European Commission and the European External Action Service, is critical to avoiding divide-and-rule outcomes under a Trump presidency.
Trump’s style, Europe’s substance
Unlike the Cold War era, today’s great power competition isn’t about ideology alone — it’s about who controls the flows of technology, data, and critical materials.
Trump’s preference for deals over doctrines may clash with the EU’s normative style but therein lies an opening. Europe must learn to translate its regulatory power into geo-economic leverage, and to do so swiftly.
The EU can no longer afford to expect “special relationship” privileges. It must earn them. This means real investments in defence (to answer Trump’s Nato criticisms), real proposals on trade (to complement US nearshoring), and real partnerships with third countries (to diversify away from Chinese dependence).
President Nausėda’s statement should not be seen as defeatist, but as pragmatic. If Europe accepts the reality of Trump’s worldview and responds with bold, flexible initiatives, it can avoid marginalisation. Strategic reset begins not in despair — but in clarity.
Conclusion: Reset, not retreat
The rare earth deal between the US and China shows that even amidst rivalry, room for cooperation exists — if interests align.
For the EU, the lesson is clear: waiting for ideal conditions is no longer viable. It must act now to safeguard its industrial future, secure its place in the new trade order, and reimagine its transatlantic relationship — regardless of who sits in the Oval Office.
Trump may not be the leader Europe wanted. But he may be the wake-up call it needs.
*Phar Kim Beng is Professor of Asean Studies at the International Islamic University Malaysia. Director of Institute of Internationalisation and Asean Studies (IINTAS). Luthfy Hamzah is Senior Research Fellow at Strategic Pan Indo Pacific Arena (SPIPA) Kuala Lumpur. Both authors write on geopolitics, global trade, and strategic affairs in Asean, EU and US China dynamics.
* This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.
