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by ian bremmer
Donald Trump’s second term is having considerably more impact on the global stage than his first. Trump may have been a largely transactional president last time around, when he was more constrained at home and faced relatively more powerful counterparts abroad. But the first two months of Trump 2.0 have shattered the illusion of continuity. No American ally faces a ruder awakening than Europe, whose relationship with the United States is now fundamentally damaged.
Core partners in Asia like Japan, South Korea, India, as well as Australia worry about being hit with tariffs and will do what they can to defuse conflict, but they also know their geostrategic position vis-à-vis China means Trump can’t afford to alienate them entirely. Accordingly, their relations with Washington should remain comparatively stable over the next four years.
America’s largest trade partners, Mexico and Canada, are facing more significant trade pressures from the Trump administration, but the imbalance of power is such that they have no credible strategy to push back. Everyone understands they’ll have to accept Trump’s terms eventually; the only question is whether capitulation comes before or after a costly fight. Riding an 85% job approval, Mexican President Claudia Sheinbaum has enough domestic political space to yield to Trump’s demands to keep Mexico in his good graces, as she is already doing. By contrast, Canadian leaders have a political incentive to put up a bigger fight because Trump’s threats toward Canada’s economy and sovereignty have sharply inflamed nationalist sentiment north of the border in the run-up to the April 28 elections. However, I expect Ottawa will quietly fold shortly after the vote to ensure that ongoing relations with the US remain functional.
Most US allies have no choice but to absorb Trump’s demands and hope for a reset after he’s gone. But Europe is different. It possesses both the collective heft to resist Trump’s demands and the existential imperative to do so.
Three structural forces render the transatlantic rupture permanent.
First, the European Union has the trade competency and market size to punch back against the Trump administration’s aggressive tariff blitz. Unlike most other US trading partners who lack the economic leverage to go toe-to-toe against Washington and have little choice but to fold under pressure, Brussels’ defiance ensures a protracted trade war with no easy resolution.
Second, most Europeans view the Trump administration’s unilateral pursuit of rapprochement with Russia as a direct threat to their national security. While President Trump would still like to end the war in Ukraine as he promised on the campaign trail, he is prepared to do so on the Kremlin’s terms – and he’s even more interested in business deals with Moscow. He won’t be deterred by a collapse of the Ukraine peace talks, even though it’s Vladimir Putin who’s shown no interest in softening his maximalist demands. Nor will Trump care that the Europeans stridently oppose US normalization with their principal enemy. After all, the United States is protected by two oceans from Putin’s army, and Trump’s embrace of Euroskeptic movements reveals their shared aim: a fragmented and weakened Europe that is easier to dominate.
The president’s rhetoric – echoed by the Signal-gate private texts, Special Envoy Steve Witkoff’s recent interview with Tucker Carlson, Vice President JD Vance’s Munich speech, and so many other pieces of evidence – makes clear that the current administration sees Europeans not as allies but as “pathetic freeloaders” who shouldn’t be “bailed out” as a matter of principle. Even if Washington begrudgingly agrees to provide them with transactional security, Europeans now realize that relying on a hostile US for survival is strategic suicide.
Which brings us to the third and final driver of the definitive US-Europe break: common values … or lack thereof. From free trade and collective security to territorial integrity and the rule of law, Europe’s foundational principles are now anathema to Trump’s America. Just look at Trump’s repeated threats to annex Greenland, to say nothing of his willingness to recognize illegally annexed Ukrainian territories as Russian and support Israel’s annexation of parts of the West Bank and Gaza. For an EU built from the ashes of World War II, it's hard to compromise with a worldview in which borders are mere suggestions and might makes right.
After years of complacency, European leaders seem to have finally gotten the message that the United States under Trump is not just an unreliable friend but an actively hostile power. They understand they need to drastically increase Europe’s sovereign military, technological, and economic capabilities – not just to survive without America but also to defend their borders, economies, and democracies against it. Whether they can muster the political mettle to act on this realization, however, is Europe’s greatest test since 1945.
Recent moves – Germany’s historic debt brake reform and Brussels’ fiscal and financial maneuvers to boost defense spending – hint at urgency. Yet half measures won’t suffice. If Europeans refuse to commit troops to guarantee Ukraine’s post-ceasefire security absent an American backstop and continue to balk at seizing Russia’s frozen assets and overriding Hungary’s veto, it will confirm my view that the bloc lacks the nerve to survive in a jungle-ruled world where Trump and Putin refuse to play by any rules.
The irony is that Europe has the resources and capacity to stand up for itself, its values, and its fellow Europeans. What’s missing is the collective courage to act like it’s 1938, not 1989. For Ukraine’s sake and its own, that needs to change.
Last week, the US and Ukrainian governments agreed to pursue a 30-day ceasefire with no preconditions. Putin said yesterday on that call that he agrees – as long as the halt to fighting applies only to strikes on energy infrastructure, a major military target for both sides in recent months. That’s far short of the pause on fighting by land, sea, and air that Trump wanted, though Putin did say he was also ready to talk about a pause on attacks on Black Sea shipping. (Clearly, the Russian president is tired of daily briefings on the successes of Ukrainian air and sea drones.)
In the meantime, Russian forces will continue to push for more territorial gains on the ground, and Russia remains free to launch air attacks on civilian populations. We saw more of that last night. Since spring is here and power losses will no longer leave Ukrainians in the freezing cold, the promise to hold off on attacking energy infrastructure costs Russia little.
Putin offered Trump enough to encourage the US president to continue talks on a broader US-Russia rapprochement, one that includes benefits for both economies. Trump also has no reason to begin insisting that Ukrainians and Europeans participate in future negotiations, another prize for Putin.
Any halt or slowdown in the intensity of attacks will keep more civilians alive, at least for now. That's good news, and there's likely to be further movement toward a broader ceasefire at some point later in the year, maybe by the end of April.
But a durable peace agreement is another question. Putin made clear to Trump that he has some bright red lines that must be respected. For example, the Russian president insisted there could be no ongoing military and intelligence support for Ukraine from either the US or Europe. (The US readout of the call doesn’t mention that, but the Kremlin version does.) Ukraine’s Volodymyr Zelensky will turn quickly to the Europeans for help, and he’ll get it. Neither Ukraine nor Europe has any reason to accept an end to support for Kyiv. That will be a large problem for Trump in getting the big-splash peace deal he wants.
Still, Trump might soon argue that Ukraine and its Euro allies are the obstacle that prevents a temporary ceasefire from blossoming into permanent peace. If so, Putin will miss out on a peace deal he doesn’t want in exchange for a big new opening with the president of the United States.
That’s where Trump and Putin have left it. From his visit yesterday to Finland, Zelensky offered a positive preliminary appraisal of the energy infrastructure ceasefire, but with some big caveats. He said that he’ll have a “conversation with President Trump” where he’ll try to read the fine print on Trump’s exchange with Putin. That call happened earlier today. He called on Russia to free all Ukrainian prisoners of war as a gesture of good faith, and he vowed to keep Ukrainian troops inside Russia’s Kursk region “for as long as we need.”
But the energy ceasefire is essentially a scaled-back version of the proposal for a long-range airstrike halt and naval truce that Zelensky offered before the US-Ukrainian meeting last week in Saudi Arabia. If Ukraine’s president does fully endorse the idea, Europe will quickly get to yes too. Ukraine and the Europeans will then try to work toward winning a broader ceasefire that puts the Kremlin back on the spot. For now, that prospect looks doubtful.
Sadly, today’s news on Ukraine sounds a lot like what we’ve seen in Gaza where, as hard and time-consuming as it was to get that first ceasefire, a move to phase two will yield a lot fewer points the two sides can agree on. And as with Gaza, when that first ceasefire comes to an end, expect a new burst of deadly violence.
That’s why it’s hard to be optimistic that yesterday’s bargaining has moved us any closer to a true and lasting peace, the outcome all sides say they want.
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Trump in front of a downward trending graph and economic indicators.
For someone who campaigned on lowering grocery prices on day one and rode widespread economic discontent to the White House, Donald Trump sure seems bent on pursuing policies that will increase that discontent.
If you don’t believe me, take it from the president himself, who refused to rule out a recession last Sunday and acknowledged that his sweeping tariff plans would cause “a little disturbance.” But, he added, “we are okay with that.”
Are we okay with that, though?
From Trump pump to Trump dump
Trump’s election victory unleashed “animal spirits” as many business leaders and investors hoped he’d follow through on his campaign promises to cut red tape and lower taxes while ignoring the more disruptive planks of his economic platform: tariff hikes and immigration restrictions. Surely much of it was posturing and bluffing, they thought, and Trump’s more extreme impulses would be checked by market-friendly advisers like Treasury Secretary Scott Bessent. In the worst-case scenario, they assumed Trump would course correct when confronted with sliding stock prices or signs of economic cracks.
Slowly but surely, they are starting to realize they got it wrong. Trump meant what he said and is less bound by constraints than during his first term. (I hate to say I told you so, but it wouldn’t have taken them so long to figure this out if they subscribed to this newsletter.)
The S&P500 has dropped by 8% over the last month (so far) as the president’s promised “golden age” of growth collided with the chaotic reality of Trumponomics. American equities are not only lower than they were before Trump’s inauguration but have erased all gains since he became the odds-on favorite to win the race in October. This represents the worst stock market performance in a president’s first 50 days since Barack Obama took office in the midst of the global financial crisis.
But it’s not just Wall Street that’s souring on Trump’s plans. Consumers, small businesses, and CEOs alike are all reporting sharp declines in confidence, largely due to record uncertainty about tariffs. Manufacturing activity is slowing, retail sales and construction spending are falling, and businesses of all kinds are paring back their investment plans as threats to the US outlook mount.
Inflation expectations are on the rise, with 60% of Americans believing Trump isn’t doing enough to bring down inflation and 68% fearing that his tariffs will lead to higher prices. Most Americans think the economy is on the wrong track and disapprove of the president’s handling of it. No wonder Trump’s net approval has taken a quick hit, his honeymoon ending faster than any other president’s save one: Trump 1.0.
It's the economic uncertainty, stupid
Businesses and investors have reason to worry.
In his first six weeks in office, Trump has made it clear that he is dead serious about building a “tariff wall” around America, not as a negotiating tool but to reshape global trade flows. The US effective tariff rate is set to rise to its highest level since the 1940s by the end of the year, raising prices for American consumers and businesses and slowing down growth. Trump has virtually closed the southern border and ramped up the pace of deportations, which will constrain the labor supply and lead to higher prices and lower growth. He has threatened to eliminate government subsidies, contracts, and grants that businesses, universities, and other organizations rely on. And he has empowered Elon Musk’s chaotic effort to purge, downsize, and capture the administrative state, threatening the delivery of critical public services, amplifying these macroeconomic shocks, and destroying US state capacity.
And yet, these first-order consequences of Trump’s policies are not the core reason why traders and boardrooms are freaking out about the outlook for the US economy. Don’t get me wrong, businesses prefer good policies to bad policies. But they can adapt to bad policies. You know what they can’t adapt to? Policies that can turn on a dime based on the president’s whims.
Maybe you agree with Trump that “trade wars are good and easy to win,” or perhaps you believe his policies will cause short-term pain but be worth it in the long run. But whatever you may think of the merits of his agenda, there’s no denying that the constant uncertainty he brings to the table is terrible for business.
Every business decision is a bet about the future. The one non-negotiable before making any investment is a bare minimum of predictability. When the rules of the game can change any day (and when they’re no longer applied impartially), the rational choice is to put off costly long-term investment plans – even if the possible payoffs are high.
That’s why the extreme policy arbitrariness, volatility, and uncertainty that characterizes Trump 2.0 – best exemplified by his on-again, off-again, on-again tariffs – is the ultimate economic dampener. Even if Trump walks back some tariffs or implements his pro-growth promises, uncertainty – by some metrics already higher than it was during the pandemic, the 2008 financial crisis, and 9/11 – will remain near all-time highs for the foreseeable future, discouraging investment, hiring, and consumption, and raising prices. Its chilling effect will compound the direct impact of the administration’s implemented tariffs, deportations, federal layoffs, and so on. As I warned in Eurasia Group’s Top Risks report, “in the long run this will risk undermining the predictability and performance of the world’s most dynamic economy, preeminent investment destination, and issuer of the global reserve currency.”
No more Trump put?
Trump seems to have no intention of backing off his plans or moderating his “move fast and break things” approach, even in the face of economic dislocation. “Markets are going to go up and they’re going to go down, but, you know what, we have to rebuild our country,” he said at the White House yesterday.
This contrasts sharply with his first term, when Trump considered the stock market a barometer of success. Back then, investors and business leaders knew they could count on the “Trump put” – the president’s tendency to curtail his most economically harmful policies when faced with financial turmoil. Now, Trump is openly saying he doesn’t care that investors believe his agenda could cause a recession and raise prices – because it might, and he’s convinced the sacrifice will be worth it for the greater good. “Will there be some pain?” he asked in February. “Maybe (and maybe not!) But we will make America great again, and it will all be worth the price that must be paid.”
So the Trump put either doesn’t exist anymore, or the threshold is significantly higher than it used to be. This makes sense when you consider the president doesn’t have to (read: can’t) run for reelection again. After being twice impeached, convicted, nearly assassinated, and taken for dead politically, the 78-year-old Trump is in a rush to cement his legacy before his “enemies” get another chance to take him down.
True, most presidents – even lame ducks – would consider avoiding a crippling economic meltdown, scoring a decent result in the midterms, and handing the reins to a same-party successor essential to a good legacy. But Trump is no ordinary president. He does not, for example, care much about the Republican Party (after all, he hasn't been a member for long). What he does care about is his own image. In that sense, he is still constrained by public opinion – or rather, his perception of it.
The key question is whether there’s anyone around him who can speak truth to power to a man who has famously little patience for being told he’s wrong. As I wrote in Eurasia Group’s Top Risks report:
Not only does the president-elect have unified government and consolidated control of the Republican Party, but he is building a more personally loyal and ideologically aligned administration than last time. His team will come into office ready to implement – rather than thwart – Trump’s agenda.
If his first 50 days are any indication, the US economy may be in for a lot more trouble until reality pierces his bubble … if it ever does. The beatings will continue until morale improves.
Trump and Putin shaking hands in front of European leaders.
In geopolitics, there are moments that define decades. Europe is facing one of those inflection points right now. How it responds will determine not just Ukraine’s fate but the continent’s future.
For generations, Europe has comfortably sat under the American security umbrella, content to let the United States shoulder the burden of its defense while it reaped the economic and geopolitical dividends of the resulting peace. But the events of the past week have exposed the fragility of this arrangement and laid bare the extent of America’s retreat from its role as guarantor of European security under President Donald Trump.
In a televised meeting with Volodymyr Zelensky last Friday, Trump declared himself “neutral” between Russia and Ukraine and “on the side of peace,” dismissing the Ukrainian president’s pleas for security guarantees before unceremoniously kicking him out of the White House. Days later, the Trump administration froze all military aid to Ukraine and suspended offensive cyber operations against Russia. the US also paused intelligence sharing with Kyiv, blinding the Ukrainian military and immediately crippling its ability to fight.
The message from these moves was clear: The United States is no longer on Ukraine’s side – and by extension, it may no longer be on Europe’s side either. If the US is willing to abandon a country whose security is indivisible from Europe’s – and a pro-American democracy we were committed to protect, no less – why wouldn’t he do the same to an EU or NATO member? The realization that Trump’s turn away from Kyiv is genuine sent shockwaves through European capitals, seemingly galvanizing them to finally start taking a leadership role for both Ukraine’s and their own defense.
The warm embrace Zelensky received during last weekend’s emergency London summit of European leaders could not have contrasted more sharply with the hostile treatment he suffered in the Oval Office just days earlier. Hugs with European leaders were followed by dozens of shows of unity, expressions of support, and pledges to increase defense spending and aid to Kyiv.
But Europe has a long history of talking a big game and falling short when it counts. Is Europe ready to actually step up this time? Or will this moment, like so many before it, end in half measures and hollow promises?
There is reason for cautious optimism that his time will be different. Unlike previous moments of crisis, European leaders at least recognize the existential nature and urgency of the challenges. As European Commission President Ursula von der Leyen acknowledged, “This is Europe’s moment, and we must live up to it.” Just hours ago, French President Emmanuel Macron said that the “future of Europe cannot be decided in Washington or Moscow,” while even his arch-rival Marine Le Pen, a longtime admirer of Vladimir Putin, condemned Trump’s aid freeze as “brutal”. The show of unity and clarity of purpose are unlike anything we’ve seen in recent history.
Europe’s top priority should be to find a way to keep Ukraine in the fight without the Americans while simultaneously boosting Europe’s defense capabilities. This is a tall order, but in theory, it’s not impossible. After all, the continent has an economy ten times the size of Russia’s, and European contributions to Ukraine already exceed American ones (even if the US has provided the bulk of the military support).
Just in the last few days, European leaders have put more money on the table for defense spending and military aid to Ukraine than they had in the past three years. Here, the most promising development has been Germany’s game-changing decision to exempt infrastructure and defense spending from its strict borrowing rules, effectively allowing Europe’s largest economy to raise an unlimited amount of debt to upgrade its military and fund aid to Ukraine.
Declaring an “era of rearmament,” Von der Leyen also unveiled a plan yesterday called “ReArm Europe” to set up a €150 loan facility for military procurement and relax EU fiscal rules for member states wanting to increase defense spending. The most serious commitment we’ve seen from Brussels in years, this proposal could unlock up to €800 billion in defense spending over the coming years. European Union leaders will meet in Brussels on Thursday to discuss this plan and try to craft an aid package for Kyiv. Support is also growing within Europe for the seizure of the €300 billion in frozen Russian assets held in the EU (mostly in Belgium) – the one source of unilateral leverage European capitals have with Russia – which could add another potential funding stream for Ukraine’s defense and reconstruction.
All these moves would have been unthinkable just weeks ago, and they will go a long way toward rearming Europe and bolstering Ukraine’s capabilities.
But money alone is not enough.
Decades of underinvestment and overreliance on the United States to provide everything from intelligence to logistics to advanced weaponry have hollowed out Europe’s military infrastructure. Germany’s Rheinmetall and other European defense firms are ramping up production, but building enough of the systems Ukraine needs to stay in the fight will take time – time that Ukraine does not have. And there are some critical gaps left by the US cutoff that Europe will be unable to either fill or buy.
To be clear, the suspension of US aid will not lead to an imminent collapse of Ukraine’s defenses. The country already produces much of its weaponry domestically, often in joint ventures with European defense firms like Rheinmetall and the Franco-German KNDS, and it has enough equipment stockpiled to hold the line until summer. Increased European support can extend the runway by a few months. But Europe can’t do anything to help Ukraine solve its growing manpower shortage. Kyiv will likely struggle to sustain the fight much beyond August.
That’s why Europeans must also grapple with the question of how to credibly guarantee Ukraine’s long-term security once the fighting stops. Trump has made it clear that he wants to end the war as quickly as possible at any price. Never mind that a ceasefire without the strong security guarantees that Zelensky insists on and Trump waves away would make it likely the Russians will come back for more, posing a permanent threat on Europe’s doorstep.
British Prime Minister Keir Starmer and French President Emmanuel Macron have proposed a European peacekeeping force with 15,000-30,000 troops from a “coalition of the willing” to credibly deter future Russian aggression. The idea is feasible and shows the Europeans have seized a level of agency they didn’t have before. While the US president is reportedly open to the plan, it is fraught with a seemingly intractable contradiction: Starmer and Macron, who have already pledged British and French troops, remain adamant on the need for a US military backstop for those peacekeepers – an apparent nonstarter as Trump doesn’t want to risk World War III. But neither of these positions is set in stone, so the European plan is still on the table.
There is, of course, the question of whether Russia would even accept European troops in Ukraine as part of a ceasefire deal. Trump claims that Putin told him yes, but the Kremlin refutes that. In fact, color me skeptical that Putin is interested in negotiating a ceasefire at all when the Ukrainians have been cut off from US military support, their battlefield and negotiating position is only set to improve as time goes on, and rapprochement with the United States (possibly including unilateral sanctions relief) is on the horizon. Russia leverage these advantages to gain more Ukrainian territory and widen Western divisions, undermining Trump’s stated goal of achieving peace while seeking to extract bilateral concessions from the US. All Europe can do in that scenario is stay united in support of Ukraine, strengthen Kyiv’s position as much as possible, and try to persuade Trump to turn against Moscow.
The coming weeks and months will be the ultimate test of Europe’s mettle. If it can stand up in defense of its principles, values, and fellow Europeans, it will emerge stronger and more united than ever before. If it fails, Europe's own security and days as a credible geopolitical actor may well be numbered.
Less than a month into Donald Trump’s second term, talks to end the Ukraine war have finally begun. For the first time since Russia’s full-scale invasion in 2022, American and Russian officials sat down in Riyadh yesterday to negotiate not just the fate of Ukraine but the future of Europe … without Ukraine or Europe at the table. It’s no wonder the Kremlin left the four-and-a-half-hour meeting with a spring in its step.
Before negotiations had even started, Team Trump handed Vladimir Putin several of his core demands without securing a concession in return. The US ruled out NATO membership for Ukraine, rejected the possibility of deploying US peacekeeping forces, and acknowledged Russia’s territorial gains as the baseline for negotiations. Further, the talks excluded Ukrainian President Volodymyr Zelensky and European allies, signaling that the fate of Ukraine and Europe will be decided by Washington and Moscow.
After Tuesday’s meeting, President Trump went as far as reiterating Moscow’s call for elections in Ukraine, reportedly as a pre-condition for a final agreement, and blamed the Ukrainians for starting the war. The Kremlin’s media machine hasn’t been this happy since the early days of the 2022 invasion, when they briefly thought Kyiv would fall without a fight.
It’s hard to articulate how extraordinary the events of the past week have been. The fact that in the 21st century, Russians and Americans are negotiating Ukrainian elections and European security without either party in the room is unprecedented since the days of the Cold War.
Despite Zelensky’s and European leaders’ best efforts to get on Trump’s good side, the US is no longer a reliable or a good-faith partner. If Vice President JD Vance’s speech at the Munich Security Conference denouncing European democracy did not make that clear enough, Treasury Secretary Scott Bessent’s attempt to shake down Zelensky for 50% of Ukraine’s present and future mineral wealth revenues – not in exchange for future US support but as payment for past military aid disbursed during the Biden administration – should have. These terms amounted to a higher share of Ukrainian GDP than the reparations imposed on Germany by the Versailles Treaty.
Whether or not you’re a fan of President Zelensky, you should be able to agree that the US trying to force an election in a foreign democracy during wartime – when it can’t possibly be held safely and securely – against most Ukrainians’ wishes (including much of Zelensky’s opposition) and in violation of the Ukrainian constitution is unacceptable. Doing this not to advance American interests but to further the imperialist agenda of a war criminal like Putin is a stain on the United States and its role in the world.
Ukrainians now recognize there is a growing risk that Trump will strike a ceasefire deal with Putin on terms they cannot accept. But they still have agency: At the end of the day, no ceasefire will hold if Ukrainians refuse to stop fighting, and they will only lay down arms if they receive real security guarantees that Russia won’t be able to seize more territory in the future. Yet Trump has already said that the US will not be on the hook for deploying peacekeeping troops, leaving Ukraine to rely on Europe for post-war security (not to mention reconstruction).
Here’s the rub: Most Europeans will only agree to deploy peacekeeping forces to Ukraine if the US credibly commits to provide a military backstop (not necessarily troops but yes logistics, intelligence, and air support) in the event of a Russian attack, and the Trump administration is reluctant to offer that. Yet without a tripwire along the lines of Article 5 (i.e., not contingent on Europe’s political and economic alignment with the Trump agenda), a European security guarantee would be too weak to effectively deter Russia from using a ceasefire to rearm and trying to take more Ukrainian land in the future.
Kyiv is working furiously with European leaders to craft a plan they can present to Trump before he meets with Putin. They all recognize that if they don’t move fast, the US and Russia will cut a deal on their future over their heads. But Europe’s haplessness was on full display at an emergency meeting convened by French President Emmanuel Macron in Paris on Monday. UK Prime Minister Keir Starmer pledged to send troops to Ukraine – but only with US backing, which isn’t coming. Germany’s lame-duck Chancellor Olaf Scholz dismissed the idea of peacekeepers as “premature.” Poland, despite being on the front lines, refused to commit troops, citing its own security needs. The Baltics and Nordics would be willing to commit some troops, as would the French, but nowhere near enough – or fast enough. Europe’s inability to act decisively underscores a deeper problem: Without American leadership, the continent is paralyzed.
For Ukrainians, the stakes could not be higher. They may soon be forced to choose between accepting a loss of territory without US-backed security guarantees for the future and continuing to fight without American support – both of which would all but ensure an even bigger Russian win down the line. The irony is that Putin’s original theory of victory always hinged on undermining support for Ukraine and dividing the transatlantic alliance. After three years of failure on the battlefield, Trump’s return to the White House may finally deliver exactly what the Kremlin wanted all along.
Putin isn’t just seeking a deal on Ukraine – he wants an overhaul of the European security order. Not only has he made it clear that he won’t accept any Western boots on the ground in Ukraine (even as peacekeepers), but the broader security demands he made in his 2021 ultimatum are back on the table, including the removal of NATO troops from Eastern Europe and former Warsaw Pact countries. And Trump, who sees Europe as less ally than supplicant, seems open to delivering.
If Trump agrees to withdraw US troops and missile defenses from the Baltics, as he and his advisors have hinted in the past, frontline states would be left exposed to an emboldened Russia that has shown no qualms about using military force to achieve its expansionist goals. Just like a European security guarantee for Ukraine would be fairly useless without a US backstop, Europe would be ill-equipped to deter Russian aggression if America pulled out of NATO.
Europeans are taking the challenge seriously, but the continent’s defense spending has lagged for decades, and its military capabilities are fragmented and underfunded. Even if a politically divided Europe were to ramp up its collective security investments overnight, it would take years to build the kind of deterrence that NATO provides under American leadership – years that Europe does not have. After over a decade of complacency, it may be much too late for them to get their act together.
Europeans suddenly find themselves fighting a two-front war – facing both Russian security threats and American anti-European hostility. When the US defense secretary declares that “stark strategic realities prevent the United States from being primarily focused on European security,” that’s diplomatic speak for “you’re on your own.” But the problem goes beyond the US no longer being a reliable partner in the fight against Russia or even a last-ditch security guarantor. The transatlantic alliance itself is in trouble when the US vice president says the biggest threat to Europe comes “from within” and his Euroskeptic Trump administration is actively threatening to interfere in European democracies, undermine the European economy, weaken European unity, and even – in the case of Greenland – violate European sovereignty.
Eighty years after the leaders of the US, UK, and Soviet Union carved up post-war Europe into spheres of influence at Yalta, Trump and Putin are poised to do the same. The Russians would see their European territorial ambitions codified, the Americans would secure their own interests, and each side would divide the Arctic – leaving the rest of the world to fend for itself. This is not just a betrayal of Ukraine and Europe – it is the unraveling of the world order America built after World War II.
As we warned in Eurasia Group’s Top Risk for 2025, we are witnessing a return to the law of the jungle, a G-Zero world where might makes right. I’d love to say “I told you so,” but this is one place I wish had been wrong.
- Trump feuds with Zelensky, cozies up to Putin ›
- Putin trolls Europe about "the master" Trump ›
- Trump-Putin summit in the works ›
- Did Trump actually talk to Putin? ›
- Defending Ukraine and Europe without the US - GZERO Media ›
- Trump's Ukraine peace plan confuses Europe leaders - GZERO Media ›
- Why the US-Ukraine minerals deal changed - GZERO Media ›
- If Trump's foreign policy pushes allies away, can the US go it alone? - GZERO Media ›
- What will Trump offer Putin in Ukraine ceasefire talks? - GZERO Media ›
- Putin-Trump Ukraine call is a small win for both sides - GZERO Media ›
- Is Europe in trouble as the US pulls away? - GZERO Media ›
Germany’s Friedrich Merz in front of poker table.
Italy’s Fratelli d’Italia, Poland’s Law and Justice, and Germany’s Alternative for Germany (AfD) parties have so far remained outside the bloc, but the European Conservatives and Reformists group, which includes Italy’s Prime Minister Giorgia Meloni, published a letter last month warning Europe’s center-right establishment to work more closely with the Patriots to obstruct left-wing migration, green, and other “woke” policies. Part of the goal, argued the letter’s authors, is to build durable new ties with US President Donald Trump.
This is the backdrop for a clever political maneuver from Friedrich Merz, leader of the traditional center-right Christian Democrats (CDU/CSU) and the prohibitive favorite to become Germany’s next chancellor following a general election on Feb. 23. Merz has wrestled for weeks with the question of how to peel voter support away from the anti-immigrant AfD — without appearing to cooperate with a party that many Germans consider openly fascist.
During a late January parliamentary vote on toughening Germany’s asylum and refugee policy, Merz’s CDU accepted support from the AfD for a tougher border approach without publicly seeking it. For the first time in the country’s postwar history, a non-binding motion passed the Bundestag with the help of the far right, shattering a decades-old taboo. In response, the AfD’s many critics among political officials, the media, and the public turned the rhetoric up to 11. Merz stood accused of tearing down the political firewall that separates Germany’s center right from the far right and throwing open the “gates of Hell.” Protests, some of them violent, erupted across the country. The measure was narrowly defeated.
Then came the political jiu-jitsu from Merz. The political veteran refused to apologize. He argued that he had not sought support from the AfD and that the political firewall that continues to leave the nativist party in the isolation ward remains fully intact, vowing to never form a coalition with it. But, argued Merz, the new immigration restrictions were the correct policy for Germany. They remain the right policy, even when supported by the wrong people.
Next came a polling surprise. Not only did this dust-up fail to damage Merz’s pre-election popularity ratings, but the display of political backbone strengthened his party’s position in pre-election polling. We shouldn’t be surprised. Merz is widely viewed as a capable technocrat but not an exciting politician. His move on migrant policy, and the willingness to take hits for perceived cooperation with the AfD, is seen as a major political gamble on the eve of an election he’s already favored to win.
By both defying political consensus and then reaffirming that direct cooperation with the AfD remains out of bounds, Merz has presented himself as a more forceful leader than current Chancellor Olaf Scholz. By breaking the taboo on tougher migration and asylum rules, he has also boosted the credibility of political arguments that equivocation on these policies by Scholz and his government has done more to boost the AfD than Merz’s party has done or will do.
Migration has been the primary fuel for the AfD’s surge over the past decade as the number of asylum-seekers has overwhelmed a German system designed for much smaller numbers of people. The CDU/CSU can now feel vindicated in their migration policy strategy and can open more space for tougher policies backed by centrist parties, robbing the AfD of its go-to campaign topic. In fact, it was Christian Lindner — leader of the pro-business Free Democrats and the man whose dismissal as finance minister in November collapsed Scholz’s coalition government — who made the argument most forcefully: “Democracy must deliver so that people don’t look for an alternative to democracy.”
If the CDU/CSU wins on Feb. 23 and Merz becomes the next chancellor, highly likely outcomes, he may have scored a political win that other center-right parties in Europe have consistently missed. In France and Britain, traditional conservatives have taken a migration beating. Following last July’s second-round parliamentary elections in France, Le Pen’s populist-nationalist National Rally won more than 37% of votes to just 5.4% for the traditional center-right Les Republicans. In the UK, the Conservative Party, which held power for 14 years before losing to Labour late last year, finished third place (!) in a poll published last week. Nigel Farage’s UK Reform Party, the most hardline anti-immigration choice on offer, has pushed past Labour to take the lead, though within the poll’s margin of error.
Has Merz changed the political rules on how Europe’s center-right handles the always emotive topic of immigration? Time will tell. If so, Merz’s bold political gamble might be remembered as a game-changer well beyond Germany.
Trump and Xi on opposite sides of a fence.
The first weeks of Donald Trump’s second term have been marked by a sense of optimism about the president’s ability to get a deal with China. And frankly, I understand where it’s coming from.
From Colombia’s overnight capitulation on deportation flights and Panama’s canal cave-in to Canada and Mexico’s (admittedly token) border concessions, Trump has been on a foreign policy roll. Even Denmark – a rock-solid NATO ally – is doing its best impression of the “This is fine” meme despite Trump’s renewed Greenland threats.
This should not surprise any regular readers of this newsletter. I explained exactly why the president was bound to rack up a significant number of early wins over two months ago.
It’s easy to see how people might see these wins and conclude that Trump can bend anything and anyone to his will – including, perhaps, China. Add in the cordial vibes between the two sides lately – Trump praising Xi Jinping at Davos, delaying the TikTok ban, and imposing lower tariffs against China than US allies; Chinese VP Han Zheng attending the inauguration and talking up “huge common interests” – and you’ve got what looks like signs of a potential breakthrough.
But this optimism fundamentally misunderstands both the limits of Trump’s approach (which I also laid out three weeks ago) and the nature of US-China relations. Let me explain why I think we’re headed for a breakdown in the world’s most important geopolitical relationship.
The art of no deal
First things first: Xi prefers a stable relationship with the US, especially while he deals with serious economic challenges, growing social stability concerns, and an underperforming military. For his part, Trump is not interested in causing a stock market crash at home and would like a “grand bargain” he can sell as a win. Preparations for a summit between the two leaders this year are accordingly ongoing.
But even though Xi and Trump both want a deal, there’s no room for a viable compromise. The gap between what the Trump administration wants and what Beijing is prepared to offer is too wide to bridge.
For China, the goodies on the table are transactional: more agricultural and energy purchases, better treatment for US companies in China, increased Chinese investment in America, a TikTok compromise, and maybe even help brokering a ceasefire in Ukraine. Beijing would also demand concessions in return, especially the rollback of US tech restrictions.
While Trump may be personally enticed by such a deal, it is a nonstarter for the trade and security hawks in his cabinet and the Republican Party. These people don’t see China as a country to accommodate – they see it as a strategic competitor that needs to be contained while America still has the advantage. They want nothing less than structural reforms to China’s economy, complete technological decoupling, and an end to China’s military modernization. That’s obviously not something Xi can negotiate away without essentially giving up China’s core national ambitions, no matter how hard Trump pushes.
Could Trump override his team’s opposition? On lots of issues, absolutely … but on China, I’m not counting on it. And neither are the Chinese. Their goal at this point is to buy time – stringing Trump along as long as they can and playing into his desire to get a deal to keep his hawkish advisers in check, reducing the risk of a near-term breakdown while China’s economy stabilizes.
Red lines
But this strategy will not last forever. The Trump administration’s actions in a number of policy areas – from trade to tech restrictions to Taiwan policy – are sure to inflame tensions. The cumulative impact of these spoilers will sooner or later cause the bilateral relationship to break down.
Just yesterday, Trump followed through with implementing 10% across-the-board tariffs on Chinese imports. Unlike the tariff threats on Canada and Mexico, this is not a negotiating ploy – it’s the opening salvo in a trade war that will only intensify in the coming months. And unlike the last trade war, this time China is ready to respond despite being economically weaker.
Beijing hit back with counter-tariffs on American energy and manufacturing, slapped export controls on critical minerals, and launched an antitrust investigation into Google. All things considered, this was a relatively measured response, calibrated to show strength while maintaining space for negotiations and keeping powder dry for bigger fights ahead. Come April 1, when the Trump administration’s trade policy investigations wrap up, we’re likely to see major new tariffs and tech restrictions – and more aggressive Chinese retaliation.
But the real breaking point may come not from tariffs – or from escalating tech restrictions or a cross-strait crisis – but from US actions targeting the legitimacy of the Chinese Communist Party. Events in 2020, when relations broke down during the COVID-19 pandemic, convinced China’s leaders that Washington is irredeemably bent on containing China’s rise and – ultimately – unseating the CCP regime. Trump’s appointment of vocal China hawks like Secretary of State Marco Rubio and National Security Adviser Mike Waltz has reinforced that conviction.
CIA Director John Ratcliffe’s first move in office was to flip the agency’s position on COVID-19’s origins to support the lab leak theory, something Beijing is particularly sensitive about and has identified as a bright red line. Sen. Tom Cotton praised the move as key to making China “pay for unleashing a plague.” A few days later, a US appeals court allowed a lawsuit lodged by the state of Missouri against the CCP – not China the country but the Party itself – for $25 billion in pandemic-related damages to proceed. Long overdue intelligence reports on CCP leaders’ assets could be another flashpoint.
Should any of these efforts lead to the seizure of CCP-linked assets in America, China will hit back and hit back hard – potentially seizing American assets in China and causing a breakdown in the relationship before a first meeting between Trump and Xi can even take place.
No guardrails
The most geopolitically important relationship in the world is fundamentally adversarial and devoid of trust. The only reason why it was comparatively stable in 2024 was that the Biden administration expended serious effort to develop and maintain 25 high-level bilateral channels across the cabinet.
But the Trump team has no interest in putting in that kind of painstaking diplomatic work for a relationship they view as fundamentally adversarial. Without those guardrails, there will be few management and communication mechanisms to prevent even minor provocations from spiraling into a major crisis.
Many people want to believe that Trump will somehow overcome this reality and bully Beijing into a deal. The problem is that his strongman tactics only work against much weaker countries. When he threatens Colombia and Panama with tariffs, they have no choice but to capitulate – their economies would collapse otherwise. But punching down is easy. China is an entirely different ball game: It has the size and leverage to punch back against the US in ways that other countries cannot. And punch back it will.
Though neither Trump nor Xi wants a costly confrontation in 2025, the US and China are headed for trouble. Both countries will pay a price as their economies decouple, and the breakdown will ripple worldwide, increasing costs for consumers and businesses everywhere. Most countries have zero interest in picking sides in a new cold war. But key US allies and trading partners – Japan, South Korea, Mexico, the EU – are increasingly going to have a hard time navigating that, especially on security-related issues.
The breakdown in relations will deepen bilateral suspicion and mistrust, increasing the risk of unintended escalation. It’s going to get worse before it gets better.