Concern Trump could hit Europe

after U.S. sorts out China trade

issues
There is general relief in Europe that this partial "phase one" U.S.-China
trade deal has been signed. Any easing of tensions between the two
giants is seen as a positive move, even if most of the existing tariffs
remain in place.
Initial reaction from the markets, though, was muted with European
stocks opening flat on Thursday morning.

But there are also concerns here that, with the China deal out of the way,
U.S. President Donald Trump may now turn his attention to Europe –
which in the past he has called worse than China on some trade issues.

France's president, Emmanuel Macron, reacted to the deal saying he

hoped it would not lead to new tensions between the U.S. and Europe.

"I hope it is a good dynamic. But I would not want this Chinese-American
rapprochement to be an excuse to reopen a new chapter of U.S.-
European tensions." Macron told reporters.

Read more: China, U.S. sign phase one trade deal

There is already an existing trans-Atlantic trade war with tariffs on

European steel and aluminum.

Trump also imposed $7.5 billion of tariffs on European goods ranging

from French wine and Italian cheese to Scotch whisky in retaliation to
state subsidies for airplane manufacturer Airbus. The EU replied with
taxes on U.S. orange juice, bourbon, jeans and motorcycles.

Now there are fears this could escalate further.

On 7 January, French finance minister Bruno Le Maire announced the U.S.

and France had given themselves 15 days to resolve a dispute over
France's proposed "digital tax," targeting big U.S. tech companies such as
Google and Amazon.

Washington is threatening to place a 100 percent tax on French wine,

cheese and luxury handbags, which could then lead to further retaliation.
EU-China relations

Another concern voiced here regarding the new trade deal is that since
China has agreed to buy an extra $200 billion worth of goods, agricultural
products and services from the U.S. over the next two years, will that
mean China buys less from elsewhere, including the EU?

China is the EU's second largest trade partner after the U.S. and the EU is
China's largest trading partner. The European Commission estimates that
EU-China trade is worth more than a billion dollars a day. But there are a
range of outstanding issues, with some difficult negotiations ahead.

The two sides have been working on a comprehensive investment

procedure for several years but it is proving difficult.

EU has called China a "systemic rival" and voiced concerns about

investments from state-owned Chinese companies and whether to use
Huawei's 5G communications technology.

China's ambassador to the EU, Zhang Ming, warned in a recent interview

that Europe could face a backlash from Chinese entrepreneurs that would
impact Chinese investments in the region.

"What I hope to see is that the EU will keep to the principles of

multilateralism and free trade," Zhang said.

China, though, sees Europe as an important counter-balance to the U.S.

and Beijing has declared 2020 "the year of Europe."

There are two major summits planned for 2020. First comes the regular
one in April in Beijing, when Chinese Premier Li Keqiang will meet the
new EU leadership. Then in September, President Xi Jinping will travel to
Leipzig in Germany for a special summit hosted by the country's
chancellor, Angela Merkel, and including all 27 leaders of the EU's
member states.

It is increasingly looking like 2020 could prove a breakthrough year for

Chinese European relations.