If you are still reeling from the shock and awe created by Donald Trump’s foreign policy since taking office, ‘You ain’t seen nothing yet,’ as Ronald Reagan once put it.
Trump doesn’t just want to reset trading relations with every country in the world. He wants the world to change its foreign policies to suit the end of Pax Americana – and its replacement with a muscular foreign policy that relies very little, if at all, on the kindness of strangers.
Start with the war in Ukraine. Trump’s negotiations with Vladimir Putin tell us less about the two men than they do about Europe, which is shocked to discover that Trump meant what he said when he declared he would end spending on a war in a faraway place of no interest to Americans. Trump claims the US is ‘in for $200 billion more than Europe’, and he needs funds to offset his looming massive tax cuts. And, as defence secretary Pete Hegseth made clear at the Munich security conference, to fund greater American involvement in the Indo-Pacific region.
If Europe doesn’t like the deal Trump will strike, all it needs do is announce that it will make up any revenue and weapons shortfall by taking Trump’s advice and increasing its defence spending from 2 to 5 per cent of GDP. This would enable Ukraine to continue the battle while EU negotiators strike a deal with Russia that is more to their liking.
That, of course, seems unlikely, since it would mean European countries reining in their welfare states, when there is no indication they are prepared to do this. More likely is that the EU continues to import close to 20 per cent of its natural gas from Russia, and that several EU countries will continue to buy Russian oil. It is not Trump who is surrendering to Putin, but Europe, which has the resources to keep Ukraine in the fight until it is satisfied with Putin’s terms.
Germany’s defence minister, Boris Pistorius, accuses Trump of appeasing Putin and of not understanding the negotiating posture that is part of the art of the deal. This is the same defence minister who has been complaining that his military is in tatters. Nato is advised by its intelligence services that Putin will be ready in six months to take on western Europe. A Europe which Chatham House’s Keir Giles describes as ‘totally unprepared’, with its militaries ‘hollowed out’ by their ‘decades long reliance on the US for defence.’
Europe is not doing much better when it comes to domestic policy, which in this interconnected world is no longer truly domestic. Earlier this month, some 30 European nations gathered in Paris under the leadership of Emmanuel Macron and Narendra Modi to sketch a future for AI and other innovations based on the EU model of high taxation and vigorous regulation. American vice president JD Vance explained that America prefers its model of low taxes and light regulation, and refused to sign the inevitable communiqué. As did Britain’s Peter Kyle, Secretary of State for Science, Innovation and Technology.
Unfortunately for the Europeans, this is not an area in which domestic policy can be separated from foreign policy. The American model has produced what stock traders call the Magnificent Seven: Apple, Amazon, Alphabet (Google), Meta, Microsoft, Nvidia and Tesla. It has a GDP per capita twice that of the EU. The European model has produced regulations and taxes aimed at American tech companies, along with antitrust suits and massive fines. As Condoleezza Rice, a former Secretary of State puts it, European regulations cannot be allowed to ‘stop the innovative impulse’ that allows America to retain its lead over China in AI and other technologies.
Europe now is faced with a choice between the economic model that made America great long before Trump emerged on the scene, and its own model that is reducing the resources needed to confront Putin.
Mario Draghi, formerly president of the European Central Bank, argues in the Financial Times that the EU’s ‘high internal barriers and regulatory hurdles… are equivalent to a tariff of 45 per cent for manufacturing and 110 per cent for services… and their harmful effects are increasing over time.’
The costs associated with these European taxes and lawsuits are about to be counted by the Trump administration as a costly trade barrier to American firms, a contributor to trade deficits, and therefore to be factored into future tariffs.
Finally, there is China, the target of America’s policy pivot. Trump’s policy includes erecting a tariff wall to weaken the People Republic’s already stuttering economy.
As Washington sees it, America is contributing to its European allies’ defence against Russia by degrading Xi’s ability to support Putin. This is a reasonable conclusion since China accounts for about half of Russia’s oil exports, funnelling over $60 billion annually into Putin’s war chest. By one estimate that pays for about four months of Russian spending on its war with Ukraine. America is also prepared to weaken Putin by denying Russia the dominance of the Arctic via a takeover of the strategically located Greenland.
In return for America’s efforts to weaken Putin as he prepares his next move, Trump, Vance and Hegseth see Labour Chancellor Rachel Reeves scampering to Beijing in the hope of ‘finding opportunities for safe trade and investment.’ She estimates that those ‘opportunities’ have already produced benefits worth £1 billion for the UK economy, with financial services and agriculture among the beneficiaries. Germany is also making it easier for Xi to resist America by remaining China’s top trading partner in Europe.
In 1959 President Eisenhower warned that the Europeans were close to ‘making a sucker of Uncle Sam’ by refusing to ‘do more’ to defend themselves. President Trump believes Europe succeeded in turning Uncle Sam into Uncle Sap. Those days are over. America will not continue to squander its resources doing for Europe what Europe declines to do for itself.