Europe’s Turnaround
In his first speech after winning elections, Germany’s Friedrich Merz called for European independence from the US.
February 2025
The Trump administration’s debut in foreign politics couldn’t have been more brash. European leaders were prepared for potential sanctions as well as demands for an increase in defence spending. However, the lack of support in recent negotiations and the willingness to exclude Europe from first negotiations on Russia-Ukraine were an unexpected turn around.
Why did the Trump administration decide to position itself squarely in conflict with Europe, and why does Europe matter so much to them? As Martin Sandbu of the FT writes, because “the EU and Europe more broadly, if it can stay united, has the ability to put up resistance that matters to Maga America and its Big Tech oligarchy”. If it can stay united. Investor consensus remains sceptical around Europe’s fragmentation on key issues highlighted by the Draghi report, including defence, energy and technology. As a result, European assets continue to trade at a discount.
But what if the Trump administration’s antagonism turns out to be the kick European leaders needed to accelerate integration?