Geopolitics during the last twenty years has been shaped by two systemic shifts: the struggle for dominance in Eurasia, itself a recurring theme for over a century, and the festering and incremental tension in the Atlantic Alliance that has prevailed since the end of the Second World War. Both were features of the first Trump Administration, and after a short hiatus for the latter during the Biden years, the Alliance suddenly fractured in a few short days earlier this month.

As Lenin is alleged to have said, ‘There are decades where nothing happens; and there are weeks where decades happen’. The last two weeks prove the point.

The United States Secretary of Defense, Pete Hegseth, told the Ukraine Defense Contact Group at NATO that the US accepted several of Vladimir Putin’s conditions for ending the fighting in Ukraine and that Europeans were now on their own. Two days later, Vice President JD Vance told the Munich Security Conference in hectoring style that his main concern was Europe’s retreat from some of the fundamental values prized by the US. A few days after that, American and Russian officials met alone in Saudi Arabia, and Trump stated that Ukraine had started the war, and called President Zelensky a dictator. To cap it all, the US joined Russia to vote against a UN resolution on the Russo-Ukrainian War a week ago – and abstained from voting on another it had drafted after the addition of amendments proposed by European countries.

Against this background, Germany went to the polls. The Christian Democrats (CDU) ousted the Social Democrats, but before all the votes had even been counted, the CDU leader, Friedrich Merz, urged Europe to adopt a policy of  ‘strategic independence’, and questioned the future of NATO. At the very least, this will entail a rise in European defence spending and obligations, which the US will welcome, even though European countries are light years way from being able to replicate the US’s air and intelligence capacities or its NATO and nuclear leadership.

A flurry of diplomatic activity has been unleashed. In the last week, President Macron of France and Prime Minister Starmer of the United Kingdom went to Washington to explore, among other things, joint ownership of a peace agreement in Ukraine. President Zelensky also agreed to sign a renegotiated Ukraine-US minerals agreement under which both parties would develop the mining of certain critical raw materials, such as lithium, rare earths, and titanium, and set up a joint fund to share the proceeds. Several important details had yet to be agreed about a deal whose significance may have less to do with Ukraine’s mineral wealth per se than with giving the US an investment in Ukraine, and the latter a platform on which to keep the US engaged. That said, Ukraine will get money to help rebuild its economy, and the US gets additional access to some supplies and processing of critical raw materials that allows it to lessen its dependency on China.

These constitute slightly more hopeful signs that, despite the friction between the US and Europe, the Atlantic Alliance is not doomed to inexorable decay. Nonetheless, there is little question that trust in transatlantic relations has been dealt a blow. The risk of a tariff or wider commercial war remains elevated. Indeed, last week Trump announced, without giving details, that he would levy 25 per cent tariffs on imports from the EU.

The EU could certainly retaliate against the US. The Commission’s trade defences have been strengthened by the Anti-Coercion Instrument. It could hit back by imposing its own tariffs on, for example, metals, chemicals, pharmaceuticals, and also digital services, including information technology and intellectual property, and financial services, of which the US is the world’s largest exporter.

This might then be the tip of an iceberg of separation, either triggered by hostile US actions against Europe or Europe distancing itself increasingly from the US. Trade and other restrictions would entail a recalibration of supply chains, possibly involving Europe going out on a limb with regard to China engagement. The US would rail against such a move. Technology, and telecommunications industries would probably go separate ways or at least be restricted from sensitive security areas and institutions. European financial institutions and infrastructure would pose a far bigger challenge to the status of the US dollar than the Renminbi has done or might.

Yet, such judgements may still be premature. These are early days, and negotiations may yet result in softer outcomes, or indeed in a suspension of the tariffs, as happened with Canada and Mexico. The EU along with the UK can try to do deals with the Trump administration, underscoring mutual interdependence.

There is no denying that the EU can stand up for itself on trade. It is certainly a huge trading bloc, importing as much as the US, but exporting significantly more. Its exports of goods and services are about 16.5 per cent of the global total, placing the bloc slightly ahead of China in this respect. The US is the EU’s largest trade partner: about a fifth of EU exports go to the US, and about 14 per cent of its imports come from there. The US and Europe are also one another’s biggest destinations for Foreign Direct Investment (FDI) by a country mile, investing sums into their respective economies that are far bigger than either of their investments in China and the Asia-Pacific region.

The highly integrated and interconnected nature of the economic relationship between these two continents, however, is likely to persist. Their deep ties span the production and distribution of energy and technology products, the alignment of technology standards and protocols, cultural, people-to-people exchanges and research and development collaborations, financial sector and capital market linkages, rules covering data collection, distribution and transfer, and economic and other security matters. The latter include European LNG imports from the US, collaboration in the Trade and Technology Council, cooperation in the semiconductor industry and in export controls against China, telecommunications and policing of guardrails against Chinese surveillance, and joint initiatives under the auspices of the G7 to diversify critical raw material access and processing and establish infrastructure and investment programmes.

The big question for Europe, though, is the same as it has always been: namely whether, for all its large aggregate measures of size, it is more than just a collection of states with contiguous borders. It is certainly the biggest free trade area in the world, it features the biggest single market, and is a so-called optimum currency area with its own single currency, central bank, and monetary system.

On the other hand, its weaknesses are equally evident. Its undoubted soft power is being overshadowed by a still sparse hard power. Unanimity and strength of purpose and conviction has not always been its strong suit. It has not been able to rival, by and large, the levels of excellence in technology realised by the US and China, and also Japan, South Korea and Taiwan. With AI, quantum computing and biotechnology holding out the promise of rapid advances, and gains in productivity, it is important for Europe to not be left behind.

The circumstances in which geopolitics has shifted against Europe and European ideas in recent years, and also Trump’s approach to foreign, economic, and commercial policies, have certainly come as a wake-up call for European leaders. The EU’s founding architect Jean Monnet once said that ‘Europe will be forged in crises and will be the sum of the solutions adopted for those crises.’

He was not wrong, but today’s acid test is demanding, and requires new commitments to Ukraine in the first instance, but also, as a matter of priority, to stronger defence and security, and to more integrated, co-ordinated and demand-friendly economic and financial policies, including joint or common fund-raising where necessary. The report by Mario Draghi, The Future of European Competitiveness, released in 2024, called for, among other things, additional funding of 5 per cent of GDP to keep up in the scientific and technological revolution. The document was written before Trump’s return, but is of even greater significance now. Europe needs to reflect on how to develop industrial policy over the next few decades and align its trade policies accordingly if it is to hold its own as one of the world’s three major blocs.

It is by no means assured that Europe will summon the will and capacity to do this, but it has the opportunity to exploit its advantages, including interpersonal relations with leading US politicians, its own potential, and the systemic economic and financial ties that bind itself and the US. The shockwaves emanating from geopolitical shifts, the Trump Administration, and the pressures to adapt promptly to new demands in the economic and defence spheres suggest that, despite the current political and commercial rifts, breaking the Atlantic Alliance completely might actually be quite hard to do.

We can only hope so, because otherwise Europe will be lost in a world defined by the shifting balance between soft and hard power, and by the all-important central fault-line which runs through every sinew of Sino-US relations.