A Strategic Win For Europe?

U.S. President Donald Trump shakes hands with President of the European Commission Ursula von der Leyen as he announces a trade deal with the EU, including significant European purchases of energy from the United States. (Photo by Andrew Harnik/Getty Images)

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This past Sunday, President Donald J. Trump and European Commission President Ursula von der Leyen announced preliminary terms of a trade deal between the U.S. and the EU from the Trump Turnberry golf resort in Scotland. A key component of the agreement is a pledge from the European Union to purchase $750 billion worth of energy exports from the U.S. over the next three years. The deal also involves commitments by the EU for European companies to invest $600 billion in a number of U.S. industries. In return, the EU received only a maximum 15% tariff on most of its exports rather than the 30% many had feared. However, announcement of the “big ticket” items averted what many had feared would devolve into a trade war as Trump’s declared August 1 deadline for 30% tariffs to kick in loomed.

This energy deal follows the NATO summit Trump attended in late June, which resulted in an announcement that NATO members agreed to the U.S. demand that they increase defense spending to 5% of GDP, and, notably, strong praise of Trump by NATO Secretary General Mark Rutte.

The timing of these two deals is no coincidence. For both the U.S. and EU, more than just energy is at play here. Security is at stake.

How Real is the Deal?

Time will tell the extent to which this agreement favors the U.S. Critics are already claiming the EU “capitulated”, that even this “humiliation” will not necessarily stop a trade war, and that the deal “jeopardizes rules-based global trade.” Hungarian Prime Minister Viktor Orban, generally a Trump supporter, said, “It wasn’t a deal that President Donald Trump made with Ursula von der Leyen. It was Donald Trump eating Ursula von der Leyen for breakfast.” This is a vast exaggeration.

While the deal has been criticized as being overly favorable to the U.S., and while the EU was not negotiating from a position of strength, the outbreak of a trade war would have been economically disastrous for both sides. Europe’s endemic competitiveness problem, in part driven by its Berlin-inspired, shortsighted energy policy, combined with overly aggressive dirigisme (state control of economic and social matters) and internal bickering, means has Europe failed to be nimble enough to turn gaps in Trump’s scattershot tactics to its advantage or move quickly to build economic coalitions with other major global economies that could strengthen its hand.

Specifics of the energy purchases to be made by the EU have not been released. U.S. exports of oil, LNG, and coal to the EU totaled $76 billion in 2024 and would need to triple to reach the annual $250 billion figure outlined by the agreement. Though an EU official noted that the number reflects how much U.S. energy supply the bloc can accommodate, neither side has provided detailed information on what else is to be included, like infrastructure or nuclear energy exports. This lack of details and unspecified enforcement mechanisms means commitments may not be fully realized.

Strategic Dimensions for Europe’s Energy Sector

Europe is not merely buying energy or hoping to acquire better terms of trade; it is also purchasing security. The primary reason the EU finds itself negotiating from a weaker position is a strategic miscalculation made by Germany under Angela Merkel. Berlin created a systemic dependency on Russia’s Gazprom gas and then failed to wean itself off its dependence after the Russian invasion of Ukraine in 2014. Today, a reason for the US-EU trade agreement and the EU’s pledge to increase NATO spending is the ongoing war in Ukraine.

The EU has struggled to stop importing Russian energy since the outbreak of the war in February 2022. Continuing to indirectly or directly purchase Russian energy has provided Moscow with a crucial economic lifeline that it has used to keep fueling its war of aggression. While the EU has issued aspirational statements about halting Russian gas shipments after an uptick in shipments in 2024, it must firmly establish a replacement. Buying from the better aligns with its strategic priorities and consolidates the 100+ year-old trans-Atlantic alliance.

This deal is therefore a major move toward reducing EU reliance on Russian energy, which can ensure greater energy security. and may help significantly set back Russia’s war machine by hitting the Kremlin in the pocketbook. This deal also comes at a time when President Trump has become more critical of Russian President Vladimir Putin for continuing to bomb Ukrainian towns and cities. The announcement of the EU-U.S. trade deal was followed shortly after Trump’s recent statement accelerating his declared deadline for a Ukraine ceasefire deal from 50 days to 10-12 days, citing increased frustration with Putin.

Strategic Alignment Is Better for Europe and the U.S.

Since Trump’s return to office, EU members have consistently found themselves at odds with the president. However, Trump’s recent move toward a tougher stance on Russia indicates a potential realignment in favor of Europe’s long-term security interests. The U.S. president’s visible frustration with Putin seems to suggest that he is now more willing to pressure Russia and show solidarity with European allies. While the trade deal may seem vague, aspirational, performative, and lacking clear enforcement mechanisms, Europe’s perceived concessions could ultimately prove crucial. Tensions with Russia might escalate into a broader conflict, and the EU’s readiness to accept less favorable economic terms today could be a small price to pay for stronger U.S. support in the future.

Alliance management is an art, of which Winston Churchill was a master bar none. In the dark days of 1940, soon after the surrender of France to Hitler, he sacrificed British naval bases in Newfoundland, Bermuda, the Bahamas, Jamaica, St. Lucia, Trinidad, Antigua, and British Guiana for the defense of the United States. Churchill received 50 outdated World War I destroyers, which, nonetheless, were invaluable for protecting the British Empire from German U-boats and keeping supply lines from America open. While there are no Churchills, today’s EU leaders may be taking a page from the grandmaster’s handbook.

Europe has notably increased defense expenditures and improved military coordination since the war began, but it remains far from being safe or self-sufficient militarily. This recent deal cannot only be viewed through a purely economic lens, as energy diplomacy and security concerns are intertwined. Europe may have sacrificed short-term economic leverage, but these sacrifices could yield crucial dividends as the EU members seek a better position against an increasingly aggressive Russia.