One of the justifications for the trade war between the US and China is the dependence of China of the US consumer market. Some of the biggest retail stores carry many items from China or originated in China. Sometimes the pieces are made in China and put together in the US and can be called an American product. However, for China the US represents 12% of the items they export.

In an article by Eric Reguly of the Globe and Mail, as President Trump escalated his trade war with every country around the world, all countries are looking at alternatives. One of the biggest alternatives is the EU or European Union of countries.

President Xi Jinping met with Spanish Prime Minister Pedro Sanchez.

President Trump met with Italian Prime Minister Giorgia Meloni.

President Xi Jinping urged the EU to embrace a fair international trade environment and jointly resist unilateral and intimidating practices.

One of the elements the Chinese could do is order more Airbus from the EU as opposed to buy Boeing. Boeing is the biggest contributor to export sales.

The EU has long considered China a strategic, economic and political rival.

China has been making investments in some EU countries such as Hungary. Billions of dollars are flowing into the country particularly in auto plants and battery production facilities.

Italy has been trying to reduce the equity stake held by China’s Sinochem in Italy’s Pirelli, one of the world’s biggest tire manufacturers and exclusive supplier to Formula 1 cars. The government of Italy considers Pirelli a strategic asset and national industrial treasure.

Linking to dividend paying stocks, in large businesses because they are large tend to be viewed by their host country as very important which results in many partnerships and relationships, Some are easily figure out, others not so much. For example why was Sinochem allowed to buy a 37% stake in a national treasure? It is complicated and about money, Pirelli needed it. What does that mean for the future – it is complicated and about money.

There are more questions than answers, till the next time – to raising questions.