Trillion Dollar Bills: The Costs of Transatlantic Dependence for Europe

Executive Summary

The old transatlantic order is breaking down. Washington increasingly expects compliance on its terms, even for traditional allies. President Trump is well aware of the power he holds. The message is that he intends to wield it as he sees fit: “I can destroy the trade, I can destroy the country…[and] impose a foreign country-destroying embargo”. ¹ This is no longer a message reserved for supposed adversaries of the US, but applied to all countries the US seeks to influence.

Europe faces a choice: stay loyal to a transatlantic partnership that imposes a foreign policy based on war and fossil energy, costing it trillions of dollars, or build an independent strategy grounded in climate stability, the everyday safety of citizens and international solidarity.

Taking Greenland and the 2022 energy shock as anchoring cases, this briefing argues that the US is normalising new levels of coercion — tariffs, energy dominance, sanctions, and demands for military spending — at a growing cost to Europe and the climate. Since the US will keep exporting shocks and extracting concessions, Europe should treat the rupture as a chance to pursue an independent foreign policy. Yet even after the US and Israel’s illegal attack on Iran launched on 28 February, European leaders have so far continued to remain firmly in lockstep with US strategy — despite the risks to global stability. ²

Key Findings

• Fossil energy is a core lever of US power, especially during crises. This power reached a new height following the invasion of Ukraine in 2022: Europe’s replacement of Russian pipeline gas with US liquefied natural gas (LNG) swapped one dependency for another. This change locked in higher costs and made Europe vulnerable to price swings, coercion and stranded fossil energy assets.
• The 2022 energy shock became a cost of living crisis that directly cost the EU and UK $1.8 trillion (€1.7 trillion) from 2022 to 2025, while US companies made $241 billion in windfall profits in 2022 alone. ³
• Europe subsidised its way through the crisis, propping up the fossil energy system and failing to develop energy independence by accelerating its climate transition. Europe’s policy failure is sharpest when compared to the green industrialisation pursued by China: from 2022 to 2025, China spent two percentage points of GDP more on the transition than the EU and UK combined.
• While they absorbed the costs of the energy crisis and underinvested in the energy transition, the EU and UK collectively allocated a larger share of GDP to military budgets than China. From 2022 to 2025, their military budgets accounted for 0.2 percentage points of GDP more than China’s, or in the case of the UK, 0.5 percentage points more. Individually, all but three of these states increased military spending from 2021 to 2024, with the median state spending 29.7 per cent more when adjusted for inflation.

As domestic political forces in the US orient the country towards coercive accumulation and militarised growth — using the state’s coercive power to extract concessions and create rents — Europe must prioritise a climate-first industrial strategy and reduced reliance on US energy, financial and security infrastructure. This reorientation means using a green transition to advance meaningful energy and economic sovereignty, allocating military spending to focus on territorial defence rather than global military operations, and rejecting interventionism and embracing multilateralism. With the US continuing to threaten global stability and the energy system, pursuing a new strategy is the only way to safeguard civilians in Europe and across the world.

The Atlantic Garrison After Greenland

The alliance between Europe, the US and Canada has historically been organised around a US-dominant security agenda. NATO allies joined the US in its post-9/11 wars, leading to an estimated million direct deaths, several million indirect deaths and trillions of dollars wasted. ⁴ Over the last decade, the US has pressured its allies to mimic its own war economy. With the new NATO spending target designed to mirror the Pentagon’s GDP share (3.5 per cent plus an additional 1.5 per cent for security spending), US allies have been forced to take a military-industrial turn, subordinating social, economic and climate needs to US interests.

Even as the US pressures allies to build an Atlantic garrison, it has begun threatening hostile military action within its own alliance, renewing the push to bring Greenland under US control. In January 2026, the US threatened to impose escalating tariffs on allies in Europe unless Denmark agreed to let the US buy Greenland, and to take military action to seize the island. At the Munich Security Conference in mid‑February, Denmark’s prime minister called the pressure “totally unacceptable”, while US officials framed any reset of the alliance as cooperation “on Trump’s terms”. ⁵

In the old international order, Europe was the junior partner, with a foreign policy broadly defined by loyalty to Washington. Greenland points to a harsher reality: Europe is no longer a junior partner to be managed, but a region to be pressured — and, when useful, divided — to keep it compliant with US priorities, including when that requires passivity towards the needs of its public. ⁶ As the Atlantic garrison turns inward, tools of US power aimed mainly at rivals in the recent past are increasingly used on allies, especially in crises when US support can be made contingent on political concessions. The post–Cold War bargain, when Europe aligned with Washington’s security agenda but retained broader latitude over domestic priorities, is over.

Denmark has been one of Washington’s most loyal foreign policy partners in Europe, so this aggression may come as a surprise. When Denmark joined the US‑led “coalition of the willing” in Iraq, its leaders argued that it had an obligation to contribute to the US‑led invasion. ⁷ More recently, Danish intelligence cooperation enabled the US National Security Agency to spy on European leaders and NATO allies using Danish communication infrastructure. ⁸

That is why Greenland is best understood as a symptom rather than an outlier. Europe faces increased costs from a country that wants even more control for even less: higher prices or tougher terms for access to US goods, technology, energy and military alliance, greater instability as US priorities override European needs, and a broader arsenal of pressure tactics when European domestic or foreign policy diverges from Washington’s demands. The lesson is not that US policymakers have suddenly become worse, but that the emerging gap between US interests and European wellbeing is now being stated plainly and enforced more directly.

The broader pattern of US strategy is escalation — from coercing rivals, to coercing allies, to normalising coercion as a strategy for any situation and increasing its intensity (Table 1). ⁹ Seen this way, Greenland is less about one territory than about a governing style; selective priorities pursued with maximal freedom of action and little justification.

What does Washington want?

While the US is renegotiating its relationships with allies and shifting the tone of its foreign policy, it retains its commitment to global primacy, an unmatched power to set global norms and priorities and prevent the rise of competitors. The Trump administration’s 2025 National Security Strategy declared the US will practice “flexible realism” and discipline about its commitments — while it also kept open a wide repertoire of intervention, coercion and deal‑making, especially in the Western Hemisphere and in energy. ¹⁰ Undersecretary of War Elbridge Colby’s January 2026 speech in Seoul reflected this posture: more “burden sharing” from allies via explicit bargaining and an insistence that allies organise around US priorities. ¹¹

Greenland is therefore less a deviation than a test of whether the US can extract strategic concessions from allies at low cost. Crises, real or exaggerated, make this extraction easier. Europe’s standard tools for dealing with the US — diplomatic protest, appeals to bodies like NATO, negotiation and legalistic language — do not deter a US executive determined to achieve a goal.

There are contradictions in the US’s immediate goals. Greenland has globally significant mineral potential, but harsh conditions, weak infrastructure and high transport costs mean that many mining projects struggle to reach commercial viability without patient state support. ¹² After brazenly abducting Venezuelan president Nicolás Maduro, the Trump administration offered US companies opportunities to exploit Venezuela’s oil industry, but some baulked because the industry needed significant investment at a time when oil prices were relatively low. ¹³

That is why the core US objective is best understood as securing pro‑US hegemony rather than optimising immediate resource extraction in any single project. Minerals in Greenland are a long-term asset for US companies; Venezuela’s crude oil, compatible with many US Gulf refineries, is an opportunity even if the economics may not be favourable for all firms. Destabilisation can create opportunities for extraction, security contracts and political leverage. In Venezuela, US strategy may be an attempt to reassert control over the oil value chain and hemispheric energy flows and to limit China’s influence in the region. ¹⁴

Europe’s dependence

For Europe, this realignment has geopolitical and financial consequences. The fantasy that the US was the first among equals in the Global North is dead, and Europe’s role as the junior partner at the top of the global hierarchy is over. Coercion is easier when counterparties are dependent on US markets and infrastructure. ¹⁵ When more of the world is subordinate to US policy, climate progress becomes harder: the US has repeatedly used trade and diplomatic pressure to blunt climate regulation in Europe, while doubling down on fossil “energy dominance”. ¹⁶ This dominance is carried out through control over production, shipping routes, insurance, finance, and sanctions — ultimately underwritten and leveraged by the militarisation of supply lines and chokepoints. China’s push for electrification and domestic renewables is, in part, driven by efforts to reduce such strategic vulnerabilities.

Dependence makes coercion cheaper and crises become moments when Washington can extract concessions. In Europe, the 2022 energy shock shows what this looks like: a cost crisis that deepened dependence rather than ending it.

The Cost of Living Crisis: Europe’s Problem and the US “Solution”

As the US has sought to secure its global primacy, its coercive capacities have been keenly focused on the fossil energy system. The 2025 National Security Strategy called energy dominance a top priority and argued that expanding energy exports can “curtail the influence of adversaries” and “when and where necessary — enables [the United States] to project power”. ¹⁷ Increasing US control of Venezuela’s oil industry after a blockade, the ongoing blockade of energy-import-dependent Cuba, and the unprovoked and illegal attack on sanctioned oil exporter Iran are the most immediate examples of this strategy. The intention is to create economic hardship by preventing not only commerce with US entities but with any entity to force a capitulation to US demands. ¹⁸

As the global economy was reeling from the effects of the Covid-19 pandemic, Russia’s invasion of Ukraine — and the sanctions-first Western response led by Washington — caused food and energy prices to spike around the world. ¹⁹ In an effort to punish Russia for the invasion, Europe began phasing out imports of Russian natural gas, but this proved a significant challenge: new sources were needed to replace the roughly 150 billion cubic metres of gas imported from Russia each year. The solution reached was largely replacing it with more expensive and carbon-intensive liquefied natural gas (LNG) from the US. ²⁰

The medium-term result of this is that Europe’s basic needs — heat and power, industrial inputs — are subject to US coercion. While speculation and anticipated supply disruptions drove initial price spikes in 2022, the effects of the crisis were higher energy prices and higher prices in general, because energy is an important input in many other products. ²¹ Today, Europe’s energy prices remain higher than most of the rest of the world. ²² Along with those enduring costs, the shock eroded Europe’s bargaining power and policy autonomy and transferred wealth to the actor best positioned to profit from tensions with Russia: the US.

Swapping dependencies

Europe relies on imports to meet a large share of its natural gas demand. ²³ Outside the European common market, LNG from the US largely replaced Russian gas, even though it played a minimal role in the energy system before the crisis. At the beginning of 2019, Russia supplied about 65 per cent of EU and UK gas imports from outside the European Economic Area (EEA), while the US supplied only about four per cent (Figure 1). Russian imports have now fallen below 20 per cent, and US LNG is around a 40 per cent share. The UK ceased importing Russian gas in 2022, while the EU plans to phase it out by 2027. ²⁴

Europe is not only dependent on natural gas imports but also on oil imports. ²⁵ The EU and UK have both reduced their reliance on Russian oil and introduced a price cap aimed at reducing export revenue flowing to Russia. Like with natural gas, the EU and UK have pledged to ban oil imports from Russia. ²⁶ Russia’s share of EU oil imports dropped from 31.1 per cent in 2019 to 3.1 per cent in 2024; its share of UK oil imports peaked at 17.1 per cent in 2020, before dropping to zero in 2023. Here, the US also filled the gap. From 2019 to 2024, the US share of the EU’s crude oil imports increased from 6.2 per cent to 18.3 per cent; meanwhile, the US share of UK imports grew from 42.7 per cent to 54.3 per cent. ²⁷ Oil is another avenue for the US to exert leverage.

Overall, Europe has shifted the centre of gravity of its energy system towards the US and its fossil energy, with a particular focus on LNG. ²⁸ The US is now the EU’s second-largest natural gas supplier after Norway. ²⁹ US officials have even branded LNG exports as geopolitical leverage: before the 2022 crisis, a Department of Energy official celebrated exporting “molecules of US freedom”. ³⁰ From 2022 to June 2025, EU countries spent about €258 billion on LNG imports, with €117.4 billion flowing to the US and €37.5 billion to Russia. ³¹

LNG: higher costs, higher emissions, stranded assets

Europe’s strategic reliance on US LNG has carried financial and environmental costs. Under the banner of REPowerEU, the EU strategy to address sharp price increases and security risks from the war in Ukraine, EU governments invested billions of euros in almost 80 billion cubic metres of LNG import terminal capacity in roughly three years, with another 80 billion cubic metres expected by 2030. ³² Yet the utilisation rate of many new terminals has been well below half, even as capacity continued to rise. The Institute for Energy Economics and Financial Analysis now warns that by 2030, regasification capacity could end up nearly three times LNG demand, leaving expensive assets idle and creating a long-term problem of stranded assets worth tens or hundreds of billions of euro. ³³ The strategy to build LNG import capacity as an emergency substitute for Russian pipeline gas conflicts with demand trends pointing to structurally lower gas use.

Compared to pipeline gas, LNG costs more, has greater price swings and is more carbon intensive. Shipment and processing add to the cost, and prices are more volatile because LNG requires more intermediaries along the supply chain and is subject to greater global competition than pipeline-delivered gas. During the height of the 2022 crisis, LNG delivered to Europe was about ten times more expensive than it was at terminals in the US, while prices rose about 50 per cent in the first trading day after the US–Israeli attack on Iran in 2026. ³⁴ LNG is also worse for the climate. In the UK context, it has a carbon footprint from production to delivery that is about four times higher than alternatives. ³⁵

Profiting from crisis: windfalls and wealth transfer

Amid these seismic changes in Europe’s energy landscape, the 2022 shock produced extraordinary windfall profits across the fossil energy sector. US companies were the chief beneficiaries. In 2022, they accrued $241 billion in windfall profits globally compared to a pre-crisis profit baseline (Figure 2). ³⁶ This dwarfs the windfall profits in the European common market ($36 billion) and the UK ($23 billion).

The crisis, and Europe’s response, led to Europe’s entanglement in the US’s energy dominance strategy — one that locks in fossil spending and channels a large share of it to US firms, which are entrenching dependence by acquiring energy infrastructure in Europe. ³⁷

Paying for the energy shock

Europe paid for the 2022 energy shock twice: through higher household and business energy bills and through large fiscal support (price caps, rebates, tax cuts and related measures) which softened — but far from eliminated — extra costs on energy bills. Conservatively, the EU and UK incurred about €1.4 trillion in excess energy costs and spent another €208 billion in fiscal support (net of windfall taxes), for a cumulative direct cost of roughly €1.7 trillion ($1.8 trillion, about two per cent of GDP) from 2022 to 2025 (Figure 3). ³⁸

The deep scars of the crisis also reveal Europe’s strategic weakness. European governments deployed vast public resources, stabilised the fossil energy system and accepted years of elevated energy prices, yet failed to invest in energy independence. This raises a question: what would Europe’s resilience look like today if it had used those resources to pursue a strategy of energy independence instead of a closer partnership with the US?

Paths not taken

Europe’s crisis response shows that it could mobilise resources at scale, but it used them to cushion its fossil energy dependence and failed to replace it. As international comparisons show, this is a choice rather than an inevitability. China, for instance, has treated the green transition as an industrial strategy to advance economic development and sovereignty, whereas Europe has treated it as a constraint and has focused resources elsewhere.

At the World Economic Forum in Davos in January 2026, US Commerce Secretary Howard Lutnick argued that because China does not have enough fossil energy, electricity and electric cars are a strategic choice. ³⁹ He then turned that logic against Europe, asking why it would pursue “net zero in 2030 when they don’t make a battery”, warning this would leave it “subservient to China”. The implication — that Europe is foolish to invest in a green transition — takes the strategic lesson backwards: electrification and clean power are precisely what would make Europe more secure. This is as real for Europe as it is for China.

Since the 2022 energy shock, China has spent €1.1 trillion more on the green transition than Europe — a greater share of GDP by two percentage points (Figure 4). ⁴⁰ The returns from this investment are evident in China’s progress towards electrification, which is key to ending reliance on fossil energy. China saw the share of electricity in final energy consumption increase by approximately one percentage point annually from 2019 to 2023, reaching 32 per cent. ⁴¹ Over the same period, the share for OECD members in Europe was essentially flat at about 24 per cent. ⁴²

The energy crisis was a missed opportunity. The direct costs borne by Europe to cope with the crisis (about two per cent of GDP over the period) were slightly larger than its total green transition investment effort (about 1.8 per cent) and about the same as its green investment gap with China. In the same period, Europe found sustained fiscal space for higher military spending, deepening a second dependency on the US.

Militarisation and dependence

European countries found the resources to increase military spending further during the energy crisis. For the EU and UK, all but three states spent more on military spending in 2024 than in 2021 in inflation-adjusted terms, with the median member spending over 29.7 per cent more. ⁴³ This was on top of a large increase in the previous decade — the median country spent 24 per cent more in 2021 than it did in 2010.

With estimated 2025 data, these countries spent 1.9 per cent of GDP on the military, considerably higher than China at 1.7 per cent from 2022–25 (Figure 5). ⁴⁴ Individually, the UK pays even more as a percentage of GDP: 2.2 per cent.

Europe is also becoming more reliant on US weapons; the US supplied 64 per cent of European NATO states’ weapons imports in 2020–24, up from 52 per cent in 2015–19. ⁴⁵ As the energy shock and the development of LNG infrastructure have locked in the US’s energy dominance, weapons procurement creates a parallel form of lock-in through long-term contracts, interoperability standards and sustainment that follow. ⁴⁶

Major platforms and systems require long-term relationships for software updates, spares, maintenance, training and munitions, and they increasingly rely on proprietary data, systems and components controlled or mediated by US firms and authorities. Over time, this exposure can become expensive and hard to unwind, making autonomy costly in practice even when it looks available in principle. As with LNG, lock-in comes first — and leverage appears in the next crisis — all while profits continue to flow to US firms.

This carries heightened risk when military spending comes at the expense of other investment priorities, especially given that it has a weaker impact on jobs and growth than many other forms of public spending. ⁴⁷ As a result of their partnership with the US, European states risk their economic sustainability. ⁴⁸

A cycle of dependence

The core lesson is that Europe is pursuing a short-term strategy that leaves it reliant on fossil energy and rising military commitments at the expense of the investments needed to reduce vulnerability at its source.

The energy shock was a stress test of dependence. Europe failed in a way that left it poorer and politically brittle both domestically and externally. Without a commitment to a green transition, Europe risks falling into a cycle in which coercion produces shocks, shocks justify militarisation and fossil energy spending, and both drain the investment capacity needed to escape the next shock. If the UK and NATO members in the EU were required to meet the 3.5 per cent or 5 per cent NATO spending targets during the energy crisis, this would have amounted to €1.2 ($1.4 trillion) and €2.4 trillion ($2.6 trillion) in extra spending, respectively (Figure 6).

The political consequences of prioritising military spending are predictable. As living standards are squeezed and legitimacy is eroded, the solution on offer is not energy sovereignty through climate investment. Instead, the deal is higher military spending and deeper integration into a US-centred security economy, with links to alternatives broken for Europe, but not the US. This does nothing to meet social needs in Europe, but it does ensure money flows back into US hands.

Future Risks: Militarisation and the US Political Economy

From Europe’s perspective, exposure to the US is a continued risk. This is because Washington exports the costs of its own contradictions: weak productive capacity drives protectionism, dollar dominance enables sanctions and extraterritorial enforcement, and a weapons industry captured by the security state has permanent incentives to escalate, amplified by domestic political breakdown.

Future administrations — Democratic or Trump-aligned — may have strong incentives to inherit, normalise and selectively extend the tools that the Trump administration has put back on the table, especially during crises.

This model has taken hold and may persist, not least due to fractures among US elites and the composition of the domestic coalition behind coercive accumulation.

A fractured US elite and a shift to coercive accumulation

US foreign policy reflects struggles within US capitalism, as well as being a contest between the US and the rest of the world. The core beneficiaries of the bygone neoliberal and unipolar eras were financial capital, major multinationals and the legal and institutional architecture that enabled global regulatory arbitrage (e.g., tax avoidance, capital mobility and outsourcing). A militant bloc centred on traditional industry, fossil energy, security bureaucracies, crypto and politically connected rent-seekers has emerged — aligned behind the Trump administration’s willingness to break rules, use threats and treat the state as a mechanism for selective enrichment. ⁴⁹ The latter group gives Trump wide latitude to use the government to restructure the economy and international relations, even as Trump, along with many of his policies, is deeply unpopular. ⁵⁰

One useful way to read the shift is as decline and overcompensation. Since the 1970s, US elites increasingly set the rules for the global economy to their benefit and enjoyed “exorbitant privilege” from dollar dominance, but a lack of planning and the short-term pursuit of returns hollowed out US productive capacity. ⁵¹ With productive capacity limited and US hegemony facing mounting challenges to its financial dominance, Trump’s coalition seeks to extract more from the world, offer less, and rely more on military power and hybrid warfare. This is intended to offset economic weakness and encourage industry to return to the US. In support of this goal, the Trump administration is seeking to subordinate elites in finance, law, arts and culture and academia to this agenda. ⁵² China’s rise, despite US control of the global economy, is an important driver of this schism, as it implicitly highlights the failures of the US economic model and US primacy during the unipolar era. In the context of artificial intelligence, Palantir CEO Alex Karp put the relationship in zero-sum terms: “[t]here are positive and negative consequences, and either we win or China will win.” ⁵³

Protection at home, coercion abroad

This domestic alignment manifests through tools that blend economic management, coercion and security power.

The Trump administration’s tariff regime illustrates how militarisation becomes domestic economic policy. ⁵⁴ To Trump officials, tariffs are predominantly tools for discretionary punishments and rewards: levers to discipline allies, compel concessions and create a national market whose terms are set by political access. The result is a state-captured market: firms with political connections can seek carve-outs, exemptions or rate reductions, while others pay the full cost.

This coercive logic is now unusually explicit, and it is not a stable foundation for global economic relations. Even within the US, lawmakers have warned that tariff relief is granted through an opaque, closed-door process that appears to favour the politically connected. ⁵⁵ Investigative reporting has documented how secrecy and confusion around exemptions create space for lobbying and arbitrary carve-outs. ⁵⁶ While the Trump administration recently suffered a defeat at the US Supreme Court using one legal justification for tariffs, others remain.

The security-industrial state

Militarisation is not confined to trade policy. It also runs through federal spending and the institutional framing of industrial policy as security policy.

For the US and its allies, “industrial policy” was put back on the table during the Biden administration, but it fused with security in a way that is increasingly dominant. Under the Biden administration, the Pentagon’s National Defense Industrial Strategy framed supply chains, capacity and investment as questions of warfighting readiness, while Congress continued to allocate extraordinary resources to military appropriations. ⁵⁷ This strategy has not worked in the context of semiconductors. ⁵⁸ For Europe, this means US domestic growth and international relationships are being more closely tied to US military-industrial priorities.

Europe’s Atlantic garrison relationship with the US is, therefore, changing in two important ways. First, it is becoming more transactional and disciplinary for allies than in the recent past. The older bargain — alignment in exchange for military alliance and some latitude on domestic priorities — is giving way to an arrangement in which Washington seeks to exact concessions. Spending benchmarks and procurement expectations increasingly function less as shared planning and more as enforcement to align European industrial policy with US priorities. In this sense, the garrison turns inward: Europe is reorganised domestically around a military-first political economy with terms set elsewhere.

Second, the garrison relationship makes Europe prone to instability. As US domestic political economy becomes more coercive, military alliances become direct channels for volatility. A garrisoned Europe inherits US threat perceptions and absorbs the costs of US political dysfunction, like reduced policy autonomy and greater exposure to escalatory dynamics it does not control. The deeper Europe embeds itself, the more it crowds out climate investment and civilian resilience and the harder it becomes to pursue the autonomy Europe needs to provide safety for its citizens.

Removing constraints and prioritising profits

Alongside this militarisation in spending and industrial policy, the US has been attacking and delegitimising multilateral institutions, especially where they could limit unilateral action or impose climate commitments. The tactics to accomplish this are well-established and used by US administrations, but take on new significance in the Trump era. ⁵⁹

In January 2026, the White House announced withdrawals from dozens of international organisations, citing them as contrary to US interests. Whatever the merits of individual withdrawals, the strategic effect is to weaken the outside venues where smaller states can slow down or constrain US action, while keeping open the private channels through which powerful actors can continue regulatory arbitrage. ⁶⁰  This has been an enduring strategy of prior US administrations, but Trump’s statements have made US intentions clearer. A parallel signal is financial: while also a problem in previous administrations, the UN has reported substantial US funding arrears and warnings of further cuts. ⁶¹

At the same time, the Trump-controlled Gaza Board of Peace has been designed as an alternative to the UN. Announced by the Trump administration as a multilateral mechanism for reconstruction and stabilisation in Gaza, it is organised around US militarised control and a clear attempt to bypass UN structures. This is an attempt at direct colonial governance, themes recently echoed by US Secretary of State Marco Rubio at the Munich Security Conference. Reports that a $1 billion contribution could secure a permanent seat on the board turn multilateralism into a pay‑to‑play structure and create a template that can be replicated in other conflicts. ⁶²

As the US weakens global institutions, it has also attacked multilateral climate action. Previous administrations were also weak on domestic climate policy and often hostile to multilateral efforts, but the Trump administration has made US intentions unusually explicit. It has directed agencies to support coal plants and pressured other countries to scale back climate goals — for example, by attacking the multilateral net-zero framework for maritime shipping. Other climate measures that could affect US interests, such as the EU’s aviation emissions rules for international flights (delayed for thirteen years, initially due to the Obama administration), now appear at risk. Meanwhile, US fossil energy companies, currently facing a lawsuit in Michigan over an alleged decades-long “capture-and-kill” strategy against green technologies, are working to weaken EU climate law. ⁶³

A shock-prone political economy

The shift towards unilateralism and coercion matters for Europe not only because it changes the rulebook, but because it increases the likelihood and severity of shocks and expands the leverage the US can exercise during crises.

The US has repeatedly triggered global disruptions through domestic policy choices, including the 1980s interest rate shock, the tech bubble in the early 2000s and the Great Recession in 2007. As concerns grow about an artificial intelligence bubble, and as deregulation makes crypto assets more tightly linked to the financial system, US domestic policy could again spark a global recession. ⁶⁴ And because the US still dominates many global institutions — and because the Federal Reserve continues to function as the lender of last resort for much of the world, including Europe — any crisis gives the Trump administration and Congress leverage to reshape the global order by making US support conditional.

The strategic implications are straightforward: Europe cannot plan around US restraint. ⁶⁵ A credible European strategy must therefore begin with civilian safety: insulating ordinary people from instability, reducing reliance on US financial and security channels and accelerating a climate-first industrial strategy. It also requires political distance. Europe cannot protect its citizens while acting as an auxiliary to US power — joining destructive wars or providing diplomatic and material cover for cruelty and violence. Resilience means derisking, prioritising wellbeing over escalation and withdrawing from forms of complicity that make Europe both less safe and less credible internationally.

This requires realism about the direction of US political economy. Europe’s response should be to reduce the leverage the US can exercise over its security and prosperity — not count on future US administrations to exercise restraint, given the incentives to use the powers the Trump administration normalised.

Against Militarisation: An Opportunity for Europe

In January 2026, Canadian Prime Minister Mark Carney described a lasting “rupture” with the US and urged the non-US West to pursue resilience and national interest when not aligned with the US. ⁶⁶ But his proposed remedy — protect capital, reassure markets and adapt through a narrower, more national neoliberal competitiveness — amounted to an attempt to rehabilitate finance-led globalisation, an economic system that has been a disaster for climate and social needs.

As Carney admitted, the so-called rules-based order was not about rules; it was about who was allowed to break them. ⁶⁷ Canada and Europe have wielded this unilateral power and served as beneficiaries and accomplices of the US — including, during the US-led attack on Iran launched on 28 February —collaborating to constrain the Global South while avoiding accountability for the coercive architecture that sustained the old order. After decades of stagnation and deindustrialisation, a “national” neoliberalism is unlikely to rebuild productive capacity or withstand US coercive pressure — especially when neoliberalism helped erode that capacity in the first place.

Europe’s current approach is accommodation rather than autonomy, exemplified by a deepened military alliance, paid for by surging military spending, and reliance on fossil energy. This approach deepens exposure to US pressure through tactics such as energy dominance and demands to weaken climate law in Europe. As rifts widen, the US may also revert to influence operations reminiscent of the post-war clandestine “stay-behind” networks that constrained European sovereignty and had far-reaching consequences. ⁶⁸ These episodes show how sovereignty can be hollowed out. More simply put, since the costs of alliance are rising, the rationale behind alliance is deteriorating.

What strategic autonomy should mean

Strategic autonomy offers Europe the chance to withdraw from its role in supporting the global projection of US power and instead focus on the safety and wellbeing of its own citizens, in partnership with the rest of the world. That requires a climate-first industrial strategy that lowers the cost of living and reduces exposure to the coercion inherent within US energy dominance. It also requires confronting the violence inflicted under the neoliberal order and the post-9/11 wars, and building relationships with Global South countries grounded in mutual respect, shared prosperity and genuine solidarity.

While even a gradual shift may incur the wrath of US officials, US decline — along with rising multipolarity — may be inevitable. In the new era, the US may be more outwardly tough but inwardly weak, a strategy that is less effective against rising powers and a durable bloc of countries.

Adopting strategic autonomy requires pursuing the following policy priorities across energy, security, economics and trade.

Recommendations

A new future: cooperation, development and credibility

A new path forwards for the world cannot be built by narrowing neoliberalism into a more national and militarised project, as Carney’s comments imply. It has to be built on cooperation, development and a repudiation of the wars, invasions, coercion and covert action that discredited the old order — and a full accounting of this past intervention is necessary. That also requires ending material support for atrocities, such as weapons exports and military collaboration with Israel during its genocidal assault on Gaza and its regional escalation. A credible European foreign or climate policy cannot claim leadership or democratic legitimacy while facilitating genocide.

Europe should treat waning US primacy as an opportunity to rebuild trust — especially with countries that have been targets of coercion for decades. In practical terms, that means a race to the top in diplomatic and economic relations: better finance, fairer trade and genuine support for development, including for countries currently being pressured by the US (see Table 1). As the limits of GDP as a measure of success become harder to ignore, Europe’s relative advantage over the US also comes into focus: higher baseline security, better living standards and public services and lower inequality. ⁷⁶ “Catching up” with the US leaves Europe with the US’s fragilities, not strength.

China’s rise is instructive. Operating within a global economy shaped by the Global North, China nevertheless has achieved a remarkable development transformation through planning, lifting hundreds of millions out of poverty and building vast green industrial capacity. While the US has abdicated responsibility on climate, China chose to develop green transition technologies, deploy them domestically to reduce fossil energy dependence, and now supply them at low cost to the world. ⁷⁷ It has also weathered US-driven shocks comparatively well, insulating living standards from the effects. ⁷⁸ As its global power increases, it has signalled a willingness to deepen South–South ties by unilaterally lowering barriers to imports from African countries. ⁷⁹

Europe faces a clear choice: allegiance to the US, fossil energy dependence and declining living standards for the majority or an independent foreign policy anchored in green development and wellbeing. With the US-led war on Iran threatening global stability and potentially sparking another energy shock, the stakes are already high and rising fast.

Acknowledgments

The author thanks Adam Hanieh and Sai Englert for generous feedback on this project, and Khem Rogaly, Pinelopi Gardika, Chris Hayes, Amelia Horgan, Bella Smith and Brian Dew for helpful comments. Any errors or omissions are the author’s own.