Donald Trump’s return to the White House has renewed pressure on NATO allies, raising the spectre of troop withdrawals and triggering a bruising trade clash with the United States [4]. This geopolitical rupture has forced Europe to accelerate its defense capability gaps and overhaul its military posture, as the US can no longer be relied upon as the primary security guarantor [4]. The EU is now prioritizing transatlantic alignment only while fiercely preserving its strategic autonomy, with investment screening and industrial policy measures becoming more prominent to protect key sectors [3].
Simultaneously, Russia has pressed on with its war in Ukraine, ensuring that the continent remains in a state of high-security alert [4]. The war has intensified the securitization of all relations, with the EU adopting eight comprehensive sanctions and making real institutional progress, including appointing its first-ever Commissioner for Defence [9][10]. The challenge for Europe is not full delocation but selective decoupling and recoupling—staying open where it benefits competitiveness while protecting strategic sectors from foreign takeovers [3].
Fiscal pressure is mounting as defense spending, industrial policy, and climate mandates accumulate against a backdrop of low growth [4]. The battle over Europe’s long-term budget is now a central political crossroads, with the European Council President declaring 2026 a decisive year for strengthening competitiveness [8]. The EU is relying increasingly on unilateral tools to defend its interests, effectively taking part in a global subsidies race to ensure its own security [2].
