Europe must recognize a fundamental shift: we are entering a new Cold War between the US and China. This reality demands a complete reimagining of Europe’s approach to both the US and the evolving geopolitical landscape if it hopes to remain a significant pole in an emerging multipolar world.
During the Cold War and its aftermath, the global and European orders appeared mutually reinforcing within a cohesive Western value system. Europe served as both battleground and prize in the US-Soviet competition, ensuring American attention to European interests extended beyond mere cultural ties.
However, between the events of 11 September 2001 and the COVID-19 crisis, Europe’s gravitational pull in global politics and economics diminished substantially. Its strategic importance has waned to the point where US support now largely depends on Europe’s utility in containing China.
Asian powers now see an opportunity to shape European policy to their advantage, inverting the historical dynamic of European colonial influence in Asia. This shift occurs as Europe’s economic and financial relevance in Asia declines, leaving it overshadowed by the US, China, India, Japan, and the Quad alliance.
Despite aligned US-European interests regarding China’s challenges – from mercantilist trade practices and IP theft to human rights abuses, transnational repression, elite capture, increasing aggression, and economic coercion like that against Lithuania – both sides face the reality that decoupling from China would incur severe domestic costs.
The European establishment must therefore recalibrate its geopolitical approach amid the Europe-US shift. Rather than viewing geopolitics as a realm of permanent alliances and institutions supporting EU values, Europeans must learn to see their values as constant while treating geopolitical alignments as fluid and temporary instruments serving those values.
Europe’s economic strength – evidenced by IMF data showing that Russia’s GDP (PPP) of $4.22 trillion is outweighed by Germany ($4.32 trillion), France ($3.04 trillion), UK ($3.03 trillion), and Italy ($2.39 trillion) – has not translated into comparable geopolitical or military influence. Europe’s inability to independently manage the Russian challenge underscores this disconnect.
While the transatlantic alliance remains crucial, its future vitality increasingly depends on European capacity for self-reliance. This doesn’t mean abandoning the alliance, but rather developing Europe’s ability to proactively shape its geopolitical environment, even when its interests don’t perfectly align with American priorities.
Understanding Trumps’ Foreign Policy
Donald Trump’s background as a real estate developer, known for aggressive negotiations and deal-making, has significantly shaped his approach to U.S. foreign policy. His business experience taught him to view interactions as zero-sum games, where one party’s gain is another’s loss, and to focus on securing the best deal for the United States.
As president in his first term, Trump applied this mindset of transactional myopia to foreign policy, treating other countries as adversaries in negotiations. In his first term, he often withdrew from international agreements, such as the Iran nuclear deal and the Paris Climate Accord, if he believed they disadvantaged the U.S. Trump’s trade policies, including imposing tariffs on China, and his stance on NATO funding, reflect a transactional style aimed at maximizing U.S. benefits, rather than fostering long-term alliances.
This mirrors Trump’s real estate tactics, like using pressure and deadlines, in diplomatic negotiations. For example, he set deadlines for NAFTA renegotiations, much like his strategy of creating urgency to force decisions in business deals. This direct application of business strategies to international relations is unexpected in its extent and impact on global diplomacy.
Trump’s approach is also reflective of the “Welchism” management philosophy, popularised by former GE CEO Jack Welch. “The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America―and How to Undo His Legacy” by David Gelles, elaborates how this paradigm prioritises shareholder value over all else. This has led to strategies of relentless downsizing, dealmaking, and financialization that have had profound negative consequences for corporations and the broader economy.
The transactional mindset that dominated Trump’s foreign policy is also becoming more prevalent in global affairs, with renewed great power competition between the U.S., China, Russia, and other blocs. This shift away from the U.S.’s previous role of setting the pace for the global commons and operating with enlightened self-interest could have far-reaching implications for international cooperation and the global order.
Trump’s background in real estate, with its emphasis on competitive, zero-sum negotiations, has significantly shaped his foreign policy approach. His transactional style, prioritising U.S. gains over cooperative relationships, is a direct extension of his business practices, influencing decisions from trade wars to international agreements.
This approach reflects broader trends in corporate America and global affairs — which is already trending to transactionalism amid Great Power competition — with potentially significant consequences for the future of international cooperation and diplomacy.
With its federal interest payments outpacing defence spending as of 2024, the US under Trump is allocating resources to confront a new rival, and the trans-atlantic relationship is not the priority. And it potentially see’s room to leverage a deal with Russia to enhance its ability to optimise the allocation of resources in challenging China.
Conclusion
Under Trump, the US has adopted a medium-term strategy that strains and potentially fragments its alliance networks while diminishing its convening power. The administration favors zero-sum and negative-sum approaches over positive-sum strategies, marking a fundamental shift in American foreign policy.
This departure from America’s historically cooperative, multilateral leadership approach threatens to undermine US global influence. By prioritising narrow, transactional interests over collaborative efforts, the US risks its international standing. This shift revealed a stark contrast: while Asia had prepared for Trump’s approach and the changing world order, Europe remained unprepared.
Asian powers now wield greater influence over Europe than vice versa, though European events continue to significantly impact Asian affairs. The China-Russia partnership, despite its inherent tensions, is strengthened by their shared perception of Western threats. Both powers recognize their individual vulnerabilities and understand that facing Western pressure alone would be unsustainable, driving their continued cooperation.
John Kay’s analysis of modern corporate success offers a relevant parallel. He demonstrates how successful corporations thrive through cooperative communities that harness collective intelligence for technical and business advancement.
Yet this cooperative model can be undermined by misaligned bonus structures that measure performance through flawed metrics. The result is a short-term, transactional mindset, exemplified by the prevalence of share buybacks and diminished investment to boost short-term profits.
This costly transactionalism pervades both the US corporate sector and global geopolitics. The world risks shifting toward a hyper-transactional paradigm where narrow, short-term interests override collective benefits.
This trend undermines the foundations of both corporate and global success. European leaders in business and policy must adapt their strategies accordingly, working to align incentives and foster collaborative, innovative approaches that capitalize on our interconnected world’s potential.
