The transatlantic partnership between the United States and Europe is experiencing significant shifts in its economic and security dynamics, especially with the return of the Trump administration.
In the past year, the US initiated a trade war which eventually resulted in a trade agreement with the European Union (EU).
This agreement comes as the US has pressured NATO allies to bolster their defense expenditures.
The ongoing war in Ukraine and increasing Russian incursions into European airspace have further complicated the security environment.
To explore these evolving relations, key figures from both the US and EU convened at the Transatlantic Forum on GeoEconomics in Brussels.
The forum was hosted by Atlantik-Brücke and the Atlantic Council’s GeoEconomics Center and Europe Center.
Among the notable speakers was US Ambassador to NATO Matthew Whitaker, who emphasized the need for NATO allies to prioritize defense spending and reduce reliance on Russian energy.
Whitaker underscored the commitment of the United States to NATO, stating that it will defend every inch of NATO territory.
However, he pointed out that European and Canadian allies must take proactive steps to address defense spending issues.
He firmly stated, “Every single ally needs to start spending money on their defense and stop buying Russian energy.”
Whitaker expressed concern that if European countries continue to purchase Russian energy, the effectiveness of sanctions, including those under consideration in the US Congress, will be diminished.
Referring to the recent Hague defense commitment, which calls for allies to allocate 5% of their GDP for defense needs, he noted that while progress has been made, some allies are lagging in their commitments.
He cited Spain and Italy as examples of countries needing to take defense spending seriously.
However, he acknowledged Germany’s positive trajectory towards meeting spending targets and noted that France and the UK are willing to spend more, albeit facing economic constraints.
As Russia violates European airspace, Whitaker insisted that NATO must enhance its air defense capabilities, ensuring that costly munitions are not used to counter less expensive threats.
In his view, the challenges posed by Russia serve as a testament to NATO’s strength and readiness to respond effectively.
“In an uncertain world, we can only have peace through strength,” Whitaker concluded.
EU trade chief Maroš Šefčovič also addressed the evolving trade relations at the forum, highlighting that global trade dynamics have fundamentally changed since President Donald Trump imposed significant tariffs.
Šefčovič noted, “Global trade will not go back” to the pre-Trump era, and emphasized the necessity of adjusting to a new global trade order.
He recommended that the EU continually secure deals with the US and maintain a strategy he termed “permanent relationship management.”
Commenting on the recently solidified US-EU trade accord, Šefčovič described it as “the best possible deal,” especially when compared to the alternative of a full-scale trade war.
Despite concerns regarding Trump’s proposed 100% tariffs on foreign brand-name drugs, he expressed confidence that the 15% tariff cap would shield the EU from excessive tariffs on pharmaceuticals.
Regarding ongoing trade tensions surrounding steel and aluminum tariffs, Šefčovič argued that US-EU trade in steel is minimal, advocating for a tariff rate quota with low or no tariffs.
The EU is also making strides to diversify its trade partnerships with countries such as Japan, Mexico, Australia, the UAE, and India, according to Šefčovič.
In addition, he stressed the importance of reforming multilateral institutions like the World Trade Organization to adapt to modern trade challenges, warning that the existing rules-based order is under strain without such reforms.
Shifting focus back to trade negotiations, US Ambassador to the EU Andrew Puzder highlighted the significant transformation of Europe’s economic structure, which traditionally relied on US defense support, affordable Russian energy, and a steady market in China.
Puzder remarked that this “three-legged stool” has collapsed due to the geopolitical fallout from Russia’s invasion of Ukraine, the shifting US defense priorities towards Asia, and the downturn of the Chinese consumer market.
He emphasized that a robust European economy is crucial for the US, both for trade and as a reliable defense partner.
“We need Europe strong for trade purposes,” Puzder asserted, reinforcing the idea that European strength is also vital for contributing to global security.
Regarding the recent US-EU trade agreement, Puzder celebrated what he regarded as a favorable deal for Europe, even as he acknowledged it may not be a popular view in Brussels.
He urged Europe to increase its energy imports from the US and highlighted that the new tariffs and investment commitments were more advantageous than previous agreements reached with South Korea and Japan.
In discussing points of contention between the US and EU, Puzder identified nontariff barriers as a significant issue, particularly with EU regulations under the Digital Services Act and Digital Markets Act, which some US officials view as discriminatory.
He stressed the importance of ensuring that such regulations do not disadvantage American companies merely based on their nationality.
Puzder also urged European policymakers to consider the energy implications of advancing into the AI age, advocating for an approach that prioritizes energy abundance rather than solely focusing on efficiency or environmental concerns.
He noted that the rising energy demands driven by AI would necessitate a comprehensive energy policy.
The discussions at the Transatlantic Forum on GeoEconomics encapsulated the pressing need for renewed strategies within the US-European relationship, addressing both defense spending and trade dynamics in light of a rapidly changing global landscape.
With both sides keen on finding common ground, the road ahead holds the potential for strengthened cooperation albeit amid the backdrop of significant geopolitical challenges.
image source from：atlanticcouncil
