A survey of publicly available sources paints a bleak picture of the possibilities to repair what has already been broken.
The transatlantic relationship is currently experiencing significant strain, with a tariff war threatening a $9.5 trillion economic partnership and deteriorating bilateral relations within NATO. President Trump’s imposition of steel and aluminum tariffs, threats of 200% levies on European wines and spirits, and recent 20% tariffs on EU products have created unprecedented economic tensions. Meanwhile, provocative statements about Greenland (Danish territory) and Canada have damaged diplomatic trust. This analysis examines potential scenarios for rebuilding the transatlantic alliance and identifies measures to restore European trust in American partnership.
The escalating tariff war has placed $9.5 trillion of annual transatlantic business in jeopardy. The imposition of a 20% tariff on EU products, characterized by the US as “reciprocal tariffs,” promises to disrupt supply chains and increase costs for businesses and consumers on both sides of the Atlantic. BusinessEurope has emphasized that these unilateral actions risk triggering retaliatory measures that could further damage global trade without delivering meaningful benefits to either side.
In response, Europe has begun economic adaptation, with the EU pursuing fiscal reforms and the ReArm Europe initiative to boost defense and infrastructure spending.
Within NATO, bilateral tensions have intensified due to President Trump’s territorial statements regarding Greenland and Canada. These pronouncements have created significant diplomatic friction. NATO Secretary-General Mark Rutte’s recent White House meeting highlighted these tensions, with Trump reiterating that “Canada only works as a state” and that the US “needs” Greenland for international security.
The denial of entry for business travelers, even some with valid visas, threatens to compound economic damage. Research shows that visa restrictions can reduce bilateral tourist flows and bilateral flows of exports and foreign direct investment. These restrictions are particularly harmful to business relationships, as in-person meetings are approximately three times more effective than virtual meetings in converting potential customers into actual clients.
Alternative Scenarios for Repairing the Transatlantic Link
Scenario 1: Comprehensive Economic Reset
This scenario would envision a negotiated settlement focused primarily on economic interests. It would perhaps begin with a high-level summit between US and EU leaders to establish a temporary tariff truce, followed by comprehensive trade negotiations. Similar to the transatlantic agenda proposed during the Biden administration, this would involve establishing working groups to address specific trade irritants and creating mechanisms for regulatory cooperation. Success would depend on both sides recognizing their economic interdependence and prioritizing economic pragmatism over political posturing.
Scenario 2: Security-Driven Reconciliation
In this scenario, shared security concerns—particularly regarding Russia and global terrorism—provide the impetus for relationship repair. NATO could serve as the primary vehicle for reconciliation, with the United States reaffirming security guarantees and Europeans meeting defense spending commitments.
This pathway recognizes that despite rhetorical tensions, polling shows a vast majority of NATO country citizens still consider the transatlantic relationship important for addressing security challenges. Trust rebuilding should involve joint military exercises, coordinated positions on key security threats, and concrete American reassurances regarding Article 5 commitments.
Scenario 3: Gradual Trust Rebuilding Through Sectoral Cooperation
Rather than attempting comprehensive solutions, this scenario focuses on rebuilding trust through cooperation in less contentious areas. Climate cooperation (perhaps less likely), technology governance, and infrastructure development could serve as fertile ground for demonstrating mutual good faith. The 2021 EU-US Summit statement provides close to an ideal template, having identified cooperation on ending the COVID-19 pandemic, protecting the planet, strengthening trade and technology cooperation, and building a more democratic world. Recreating similar structured dialogues across multiple sectors would allow for gradual trust rebuilding while acknowledging that full relationship repair will take time.
Scenario 4: Crisis-Catalyzed Rapprochement
History suggests that external crises often drive alliance cohesion (case in point: 9/11). A significant international security crisis, pandemic, or economic shock could force pragmatic cooperation despite existing tensions. While not desirable, such scenarios often accelerate diplomatic reengagement by highlighting shared vulnerabilities and interests.
Essential Measures for Rebuilding Trust
To re-establish European trust, the US must first address the tariff situation. Removing the steel and aluminum tariffs and the threatened tariffs on European wines and spirits would signal American commitment to fair trade. Subsequently, establishing a tariff de-escalation mechanism and resuming discussions on regulatory cooperation would provide economic incentives for rebuilding trust.
Cooperation on technology is also critical. This would align with Europe’s economic priorities while creating a framework for productive economic engagement beyond tariff disputes.
Trust clearly requires explicit American disavowal of territorial statements regarding Greenland and Canada. Clear statements respecting the sovereignty of all NATO allies would address profound European concerns about American reliability. The US must also demonstrate consistent support for NATO as an institution, with unambiguous security guarantees to all members.
Research indicates that Europeans want the US security guarantee but are uncertain about American reliability—a paradox that must be addressed through consistent communication and actions. American support to European defense initiatives rather than opposition to them would further signal a constructive approach to shared security challenges.
To address the immediate issue of business travel restrictions, the US should implement streamlined visa processing for European business travelers and revisit recent policy changes that have led to highly publisized entry denials.
President Trump’s expectation that Europe will increase investment in the US faces both opportunities and constraints. European businesses are indeed reevaluating global investments due to trade uncertainties, but investment decisions ultimately are likely to follow market logic rather than political demands.
There may be potential for increased European investment in the US under the right conditions. However, the current tariff uncertainty and political tensions create significant hesitation among European investors.
To realize increased European investment, the US would need to offer a stable regulatory environment, predictable trade policies, and targeted investment incentives. The current approach of demanding investment while simultaneously implementing punitive tariffs clearly sends contradictory signals to potential European investors.
The NATO Summit Context and China Factor
The upcoming NATO summit preparations face unprecedented challenges from bilateral tensions between the US and key allies like Canada and Denmark. These tensions threaten to overshadow the substantive security agenda and could lead to a fragmented alliance approach to critical challenges.
Successfully navigating the summit requires compartmentalizing territorial disputes from collective defense discussions and focusing on areas of genuine consensus, particularly regarding deterrence posture and capability development.
The US-China tariff war creates both complications and opportunities for transatlantic relations. President Trump’s tariffs on China represent a significant escalation that could prompt Beijing to seek closer economic ties with Europe. This creates leverage for Europe in transatlantic negotiations but also risks forcing difficult choices between American and Chinese relationships.
A joint transatlantic approach to China, similar to what was outlined in the 2021 EU-US summit statement, could provide a framework for cooperation. However, this would require American recognition of European economic interests in China while addressing shared concerns about unfair trade practices and security issues.
Conclusion: Words Alone Are Not Likely To Repair the Relationship
The path to repairing the transatlantic relationship requires more than rhetorical reassurances; concrete actions must address the fundamental economic, security, and trust issues that have emerged.
Research from ECFR indicates that significant majorities in Europe believe they cannot always rely on the US for defense. This trust deficit cannot be overcome through words alone but requires consistent policy actions demonstrating American reliability as a partner.
The lesson from previous cycles of transatlantic tension is clear: the dramatic swings in US foreign policy from administration to administration weaken European trust in the United States as a solid partner. Only a sustained commitment to mutually beneficial policies on trade, security, and mobility can truly repair the transatlantic link and create a foundation for future cooperation.
Lars-Erik Lundin