EU considers new Plaza Accord-style deal with China

European leaders are exploring a potential trade agreement with China akin to the 1985 Plaza Accord, which devalued the US dollar. German Chancellor Friedrich Merz claims the yuan is undervalued by 30%, while the IMF estimates 15-16%. The G7 summit in France failed to produce a united front against China, overshadowed by conflicts in Iran and Ukraine and US President Donald Trump's unpredictability. Instead of a joint plan, the G7 issued milder statements on reducing dependence on foreign critical minerals and supporting balanced growth. The EU is threatening action, but doubts remain about its effectiveness given the US's failure to reverse China shock 1.0 during Trump's first term.