Commentary
Europe has a chance to beat Trump at his game – it won’t
They will likely squander yet another chance to take up the agenda Christine Lagarde revived just days ago: using the U.S. trade war to make the euro a genuine global alternative to the dollar.
Donald Trump himself appointed one of the three judges on the US Court of International Trade who, at first instance, blocked his tariffs and ruled them illegal. It is an ominous sign for the self-described dealmaker in the White House: even if his administration secures a temporary stay on appeal, this won’t be able to erase the era-defining blow dealt by Moody’s downgrade of U.S. public debt.
That was a brutal blow indeed: by the end of the year, the U.S. Treasury must place about $2 trillion in new issues and roll over some $8 trillion in maturing securities. A downgrade means higher Treasury yields, and higher yields mean higher costs for debt servicing. In light of the ruling – despite Trump’s lightning-fast appeals – Giorgia Meloni and Emmanuel Macron will have one more excuse to drop the issue of tariffs from Tuesday’s “relaxed” talks. They will likely squander yet another chance to take up the agenda Christine Lagarde revived just days ago: using the U.S. trade war to make the euro a genuine global alternative to the dollar. Instead, weapons or a revival of the automotive sector will probably dominate the agenda, especially given that the French carmakers are now led by Italian managers (Antonio Filosa and Luca de Meo).
Meanwhile, as Trump bares his teeth at the judges and Europe stumbles, China is consolidating two decisive initiatives: its digital renminbi (e-CNY) and the payment platform mBridge, an alternative to SWIFT. Introduced in 2020, the digital renminbi is the first central-bank digital currency issued by a major economy. The mBridge system, launched in 2021 by China’s central bank together with Thailand, the United Arab Emirates, Hong Kong and, crucially, the Bank for International Settlements, makes cross-border payments and currency swaps faster and cheaper. Both projects were born after Trump’s first term – hardly a coincidence.
The watershed came in 2022, after Russia’s invasion of Ukraine and Washington’s seizure of more than $300 billion belonging to the Russian central bank, which gave an extraordinary boost to both the e-CNY and mBridge. Trump’s return to the White House did the rest. As Alessandro Magnoli Bocchi noted in Il Sole 24 Ore on April 3, China’s central bank “has integrated its cross-border payment system – based on the digital renminbi (e-CNY) – with the countries of the Association of Southeast Asian Nations (ASEAN) and several Middle Eastern states.” In raw numbers, 40 percent of world trade is no longer being conducted via SWIFT, the U.S.-controlled financial-messaging network.
And there is a particularly interesting contrast: the United States made the dollar the dominant currency by exploiting the two World Wars, whereas China is extending its digital yuan through the Belt and Road Initiative. This is a fundamental difference. Infrastructure, rare-earths, energy, and intra-Asian trade in general: all of them fuel the e-CNY to strengthen mBridge, and vice versa. Empire building, in this case, does not spring from catastrophe – for which the U.S. has already paid a price. Does this mean Chinese global expansion, in production and monetary terms, is free of asymmetries, power imbalances or exploitation? Obviously not, but it is also clear that Beijing is proposing a new kind of hegemony, while the American model is a repeated attempt at “domination without hegemony.”
What about Europe? In the landscape just outlined, the EU could seize a real opportunity – by launching a digital euro, issuing Eurobonds, setting up a single treasury ministry, bringing the banking union to completion and creating a unified capital market. Europe’s excess private savings – €30 trillion – could then be channeled into public investment in digital infrastructure, AI, space and beyond.
For Trump, that would truly spell the end. However, we can be sure there are far too many in Europe – starting with Meloni herself – who will fight to keep that from happening.
Originally published at https://ilmanifesto.it/ma-leuropa-non-morde-the-donald on 2025-05-30