- President Donald Trump’s increasingly hostile stance toward traditional US allies will eventually benefit China, undermining what had been his own top priority coming into his second term, according to Evercore Vice Chairman Krishna Guha.
President Donald Trump’s increasingly hostile stance toward traditional allies puts China in a “sweet spot,” according to Evercore Vice Chairman Krishna Guha.
Prior to Trump’s second administration, Beijing was concerned that the U.S. would leverage its allies in North America, Europe, and Asia to make it harder to side with China, he told CNBC on Friday. In particular, China feared the U.S. would attempt to compel countries to adopt U.S. technologies and countermeasures against China trade.
“Instead what we see, in the first month and a half of this new administration, the conflict is between the U.S. and its allies,” Guha added. “The conflict is with Canada, it’s with the E.U. This leaves the Chinese in a sweet spot.”
That’s as Trump plans to impose tariffs on Canada and Mexico in the coming week and slap the European Union with tariffs too.
And on Friday, tensions grew further between the U.S. and Europe after a public meeting between Trump and Ukrainian President Volodymyr Zelensky turned into a screaming match, prompting European leaders to reaffirm their support for Kyiv.
While tariffs on China are already in effect with plans for more, Trump has continued to direct his ire across the Atlantic, telling reporters earlier this week that “The European Union was formed in order to screw the United States. That’s the purpose of it, and they’ve done a good job of it.”
Backlash ripped through Europe, as Prime Minister Donald Tusk of Poland, which carries the EU’s revolving presidency, responded to Trump’s comments saying in a post on X, “Quite the opposite. It was formed to maintain peace, to build respect among our nations, to create free and fair trade, and to strengthen our transatlantic friendship.”
When asked if tariff drama limits the U.S. ability to leverage Europe, Guha said that America still has the upper hand.
“I think the reality is still, that the U.S. has more leverage over Europe on tariffs, than Europe has over the U.S.” he said. “Although a full-blown trade war between the two would be substantially damaging to both sides, including the U.S.”
Guha says the U.S. economic prosperity is driven by domestic demand, while Europe relies on global demand.
“The U.S. is still the mightier partner when it comes to trade conflict, but don’t underestimate (that) the E.U. is a big market and has the ability to hurt the U.S. in a tit-for-tat situation,” Guha said. “Let’s really hope that we can avoid that for everyone’s sake.”