Caught in a triangle

The Eurointelligence Podcast

Wolfgang Munchau

News, Eu, European Politics, Political Economy, Italy, Brexit, Recovery Fund, Political Risk, Business, European Union, Netherlands, Ecb, Economics, Uk, Fiscal Union, Government, Transatlantic Relations, European Integration, France, Geopolitics, Eurozone, Banking, China, Spain, Germany, Political Union, Politics, Trade, Eu-china

4.5 • 30 Ratings

🗓️ 11 June 2025

⏱️ 51 minutes

🔗️ Recording | iTunes | RSS

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Summary

This is the start of our new extended two-part podcast. Today's theme are the widely underestimated supply chain interdependencies between China, the US and the EU. In part 1, we give the big picture. In part 2, we deep-five into details - how it affected mechanical engineering, and the defence sectors, amongst others.

Transcript

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0:00.0	Welcome to the Eurointelligence podcast. I'm Wolfgang Munchau and with me,
0:03.9	Azazana Muncheng and Jack Smith. Today we are starting a new format. We will begin with our
0:09.5	normal Eurointelligence podcast, followed by a more in-depth and more structured Q&A version as part
0:16.5	of our professional services. This new version will be free for now. It will remain outside the payroll
0:22.2	for the time being. Today's subject is the trade relationship, the triangle, between the United
0:31.1	States, China and the EU. After Donald Trump's, or even before Donald Trump's Liberation Day, we saw a massive increase
0:41.2	in imports into the United States, particular pharmaceuticals, but other products as well,
0:46.7	by companies who were front-loading on exports so they could evade the sanctions, at least the temporary
0:52.4	impact of sanctions. This is a very normal thing that will happen. And what is also normal is that the exports fell off the cliff in the months
0:58.8	directly afterwards in April and May. We've seen basically an up and a down, nothing to worry about,
1:03.8	nothing we would even do a podcast over. But what also happened is that there have been very
1:08.6	serious shifts in the relationship between China and Europe.
1:12.6	And also between Europe and the United States, the latter being more expected. But between
1:17.1	China and Europe, it's been a massive surge in import volumes into the EU. We had two months where
1:21.7	imports into the EU went up by 20% each month on month. So this is almost like a 50% increase from where we were in March.
1:31.5	So this is a massive flood of Chinese products that came into the EU market, clearly linked
1:37.1	to the fall in trade between China and the United States.
1:41.0	So there are large indirect effects and these trade disruptions that we're seeing,
1:45.8	they're very complicated, have very complicated effects. And it's not just, you know, some people
1:50.7	who are the direct impact of 10%, 20%, that's often not the main one. The main one is all the supply
1:57.4	chain stuff that's going on, the interruptions that you see and the second
2:01.8	order effects. Jack, where are we currently in this relationship? As this podcast is recording,
	...

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