Ten Things the US Loses If It Loses Europe
To say that these are trying times for transatlantic relations would be an understatement. Take a look at this poll on the popularity of Donald Trump within Europe: 63% unfavorable in Italy, 72% unfavorable in France, 75% unfavorable in Spain, and 80% unfavorable in the United Kingdom. By comparison, Vladimir Putin only does marginally worse.
And while it might be tempting to go to the Winchester, have a nice cold pint, and wait for all this to blow over, there will be some real consequences if the United States and Europe file for divorce. And, sure, though much of the media discussion of this is overblown, Trump has succeeded in infuriating the voting bases of many allied countries. Thus, even if their elected leaders have the patience to navigate through the Trump term, at some level, they are held accountable to their electorates. In that light, it is remarkable that many allied leaders are benefiting from a rally-round-the-flag effect. Normally that would be reserved for situations where the specter of a military confrontation looms, not for manufactured crises with long-term alliance partners.
So, today, let’s look at ten things that Americans lose if they lose Europe, five each from national security and the economy. Number one: a China counterbalance. We are starting off with China because it underlies much it the Trump administration’s lack of interest in European security affairs. In short, the Indo-Pacific pivot that launched during the Obama administration got serious with the first Trump administration’s 2018 National Defense Strategy, and then took a bit of a timeout when Russia invaded Ukraine is now back in full force. And the second Trump administration does not seem to care much about the consequences of disconnecting from Europe.
Well, if you actually listen to the 25% of the administration’s comments on the topic, it is not as alarming. It just gets sandwiched between the 75% of bombastic comments that are driving fear into Europeans who peruse the headlines. That said, it is dangerous to go alone in the Indo-Pacific Region. Take a look at gross domestic product by purchasing power parity, the better metric if we think about domestic arms production.
In 2024, the United States sat at $29.2 trillion. China? $37.1 trillion. The bright spot for the United States is that East Asian friends remain along the Pacific: Japan at $6.6 trillion, South Korea at $3.3 trillion, and Taiwan, the primary target of whatever may happen, at $1.8 trillion.
That gets the coalition’s cash flows above China’s, but it remains close. Do you know what would be nice in this situation? How about another $28 trillion joining the team. It will not surprise you to find out that the European Union brings that amount to the table. The good news for the United States is that Europe has reason to care about East Asian security— they also rely on a steady stream of semiconductors coming from Taiwan, and actually the Netherlands is deep into those supply chains.
The bad news is that European interests there are not as expansive as Washington’s. Thus, you have a situation where politicians in Brussels may be willing to assist in Asia, but reaching a consensus there might require some massaging. However, if the United States loses Europe entirely, there will no massage parlor to even try that.
And, to be clear, this remains a collective threat to the Western coalition. Take a look at this story from February about China imposing retaliatory tariffs following an earlier announcement from Trump. Tons of coverage worldwide, but also plenty of outlets in the United States covering it. https://ground.news/article/china-pledges-to-take-all-necessary-measures-in-response-to-us-steel-tariffs In contrast, did you know that Canada was imposing tariffs on China, and that China is in the middle of its own retaliatory dispute to the United States’ north? https://ground.news/article/china-imposes-retaliatory-tariffs-on-canadian-farm-and-food-products
Well, understandably, that received a ton of coverage in Canada, but it was much quieter in the United States despite the U.S. media being so much larger. How do I know this? It is thanks to our returning sponsor and Lines on Maps favorite, Ground News. These are just a couple of the awesome tools at the fingertips of their Vantage plan users. And using my link ground.news/linesonmaps or the QR code on your screen, you can get 40% off a Vantage subscription. So check out Ground News today, and thanks again for their continuing sponsorship of this channel.
Moving on, number two is military bases. You know that the United States loves to project power with its aircraft carriers. That is why there are eleven of them in service today, and the USS John F. Kennedy is scheduled for deliver later this year, assuming that champagne bottle did not rupture a hole in the vessel. However, even carriers have their limits. They are as expensive as weapons systems come,
they can take a while to redeploy where Washington needs them, and they spend about 24% of their time in maintenance. Instead, wouldn’t it be nice to have land-based carriers that allow for some level of forward deployments? Well, the United States has those. 30 something of them, in fact, just in Europe. They are called “bases,” and they are something that European countries tend to be happy to host because they improve mutual security. Emphasis there on the word mutual.
Let’s hop into a time machine to 2001. The United States invaded Afghanistan on October 7. That was a turnaround of just 26 days. The only way that was possible was thanks to U.S. bases in Europe. In fact, the start of the war featured the third largest airlift in history, surpassed only by preparations for the Gulf War, and the historically iconic Berlin Airlift. A timeline under four weeks simply would not have been possible without Europe to provide logistical support. Otherwise, the United States is looking at a 2002 invasion of Afghanistan. Meanwhile, other bases provide services that time simply cannot substitute.
This is Pituffik Space Base in northwest Greenland—which, at the time of recording remains a semi-autonomous part of Denmark. Despite its name, the United States is not launching satellites from up there. Rather, it houses the NORAD advanced alert detectors. No advanced alert detectors, and you give Russia just a bit more reason to think about a surprise nuclear strike. This may be the most underrated part of the modern liberal order. You benefit from the geographic advantages that partner countries provide, all thanks to those partner countries not thinking that you will exploit those bases to hurt those partner countries.
Number three: Intelligence sharing Sure, the United States spends an absurd amount of money on intelligence, and it is growing too: from $63.5 billion in 2007 to $106.3 billion in 2024. However, there are still limits to what a country can do on its own. That is a major reason of why the United States is part of the well-known “Five Eyes” intelligence alliance, consisting of the large anglophone countries.
To better understand the benefits, let’s use the United Kingdom as an example. Once upon a time, the sun never set on the British Empire. And while the King and country got out of the imperial game decades ago, the infrastructure of human intelligence remains expansive across the commonwealth. Europe provides further intelligence coverage and in greater depth than the United States can accomplish on its own. Indeed, think about the depth of French intelligence in the francophone world, particularly concentrated in Africa. Or, perhaps more relevant to today, all of the Eastern European NATO members and their historical connections to Moscow and the Russian speaking world.
And the thing about intelligence is that you can snap your fingers and shut off most of it without, say, destroying more complicated supply chains. It is not as sticky of a system as an actual physical building full of thirty two delegations, which Europe might want to keep together despite some second thoughts about its construction. No, intelligence can disappear in the blink of an eye, as Ukraine discovered following the Oval Office meltdown. Now to number four: the arms network. Once upon a time, NATO built its reputation for collective defense by stipulating that an attack against one was an attack against all.
But quietly, its better trick may have been to create the world’s most powerful arms network. From bullets to artillery and beyond, NATO’s standardization policies mean that German, French, and British weapons systems have never been more compatible with America’s. The gains for the United States have been enormous and range across a variety of categories. For one, Europe represents a dream of an export market. The Trump administration laments the loss of American manufacturing jobs—a fall off that has lasted more than a half of a century. However, arms production is one thing that, thanks to national security considerations, has not been offshored.
As a result, Europeans support high-paying blue collar jobs in the United States. Moreover, the large orders generate economies of scale, allowing the United States to invest more in R&D and produce weapons that would simply not be possible if the U.S. armed forces were the only purchaser. The United States gets some benefits going the other way, too. Building compatible weapon systems means that stores of supplies like 155mm artillery shells are available in European warehouses. And, in a pinch, they could be shipped across the Atlantic. Now, the big talking point from the Trump administration is that Europe does spend enough on defense, and thus these benefits are not as great as they appear.
And the president is right that Europe lagged behind the target of spending 2% of GDP on defense. Only 23 of 32 of NATO members met the goal in 2024, at a time when 2% hardly seemed like enough anymore. But there is a fine line between kicking Europe into gear, and finding yourself kicked out of the perks of having European friends. This goes double at a time when there is consensus within the halls of NATO that Trump is right, even if the delivery of his message is disagreeable in its tone. The point is that it should be possible for Europe to arm and for the United States to be the primary beneficiary of the increased spending. But that is not where this is going at the moment. Here is an exercise worth doing. The media tend to produce sensationalist
takes, because they are rewarded more for garnering clicks than predicting the future— and, sadly, I am in that category too. On the other hand, the stock markets are where people have true skin in the game. It gives an opportunity for people who really think they know what is happening to put up or shut up. Whenever something happens involving Trump, Europe, and international security, the exercise worth doing is to take a look at the stock prices of a major U.S. and a major European weapons manufacturer,
say Lockheed Martin and Rheinmetall. If the United States were to thread the needle here, both companies stocks would go up whenever Trump prods Europe to spend more—the European one for obvious reasons, and the American one because Europe wants to increase orders from proven producers. In contrast, if he is lighting the relationship on fire, then the European one will go up, while the American one will go down, as Europe begins onshoring all of its defense needs. For what it is worth, Lockheed Martin is down a bit since November’s election, while Rheinmetall is on fire.
As a result, we have a situation where NATO leadership is well-aware of Europe’s deficiency, and many heads of state are taking the problem seriously. But the United States is not reaping the rewards that it could be. Number five: agenda setting power—and if you think that sounds boring, give me a second, because it is subtly one of the biggest strengths for large states. Across the spectrum in international relations, multiple agreements may be better for two or more parties than failed negotiations, but there may be opposing preferences within that constraint. Let me give you a couple of examples that you are likely familiar with.
Think about the development of one of those new weapons systems that the United States wants to construct. There is always a tradeoff between big booms and the price of production. Perhaps the United States wants the bigger boom, while European countries prefer a better price point. Now, it may not be a good idea for the United States to unilaterally produce its favorite specification. That is because if it is too far from what Europe has in mind, the continent may simply build a separate design itself.
To think deeper about this, perhaps Europe’s tolerable limit is here. Meanwhile, the United States still understands the benefits of export sales, and so it is willing to compromise down to here on the explosiveness. Well, that still leaves this range of specifications to negotiate over.
Where agenda setting power comes into play is the ability to simply pick whichever weapons system you want. So you go with what Europe finds barely acceptable, And thus all of the surplus benefits of the relationship go to you. Here is another example from a different context. Long-time Lines on Mapsamaniacs know that if warring parties can reason what the expected outcome of a conflict will be, then a range of possible peace deals exists around it because both sides benefit by not suffering the costs of war. However, within that range, the two parties are diametrically opposed on which deal to reach. One way to think about the current transatlantic rift is that the Trump administration does not care about which will be implemented.
Rather, the goal is to simply maximize the probability that a deal comes to fruition, recognizing that there may be some uncertainty over where the bargaining range lies. Meanwhile, Europe is adamant that Ukraine obtain as good of a deal as is feasible. Trump has tried to set the agenda by going ahead and meeting with Russia, with Europe conspicuously absent from the table. And while the public discourse surrounding that meaning was overblown—compare Secretary of State Marco Rubio’s demeanor from the Russia summit to the more recent one with Ukraine— Europe sees this as going past its tolerable limit—in effect, that Washington is abusing its agenda setting power.
And thus we will wait and see if and how Europe constructs an alternative. Number six, as we switch to economic concerns, is U.S. national debt financing. And this is fitting because it is what allows the United States to keep its military spending as high as it is. At the time that I write this, the U.S. national debt sits at 36 trillion, 571 billion, 918 million, 752 thousand, 191 dollars.
That’s a lot. And in the time it took me to say that sentence, the debt rose by a quarter million. In 2024, the government’s budget deficit was $1.83 trillion. Defense spending was $884 billion, the second biggest budgetary category after the $1.5 trillion in Social Security.
What makes all of this possible is that the United States has an endless stream of lenders at the ready to bid on U.S. Treasury bonds. And the reason they are all there is because the dollar serves as the world’s default currency. If you are a foreigner and want to hold something relatively stable, you will likely seek U.S. dollars. Hence this cash drawer with Iraqi dinars mixed in with the greenback. If you are a world government and want to hold a reserve currency, a large portion of that will be U.S. dollars—in fact, about 58% of global reserves, as of 2024.
And if you want to exchange two currencies, say Indian rupees with the Belarussian ruble, there is probably a bill in between: the U.S. dollar. That is, the rupees are first converted to the dollar, and then the dollar is converted to the ruble. All of that creates excess demand for the dollar worldwide, which in turn makes U.S. treasuries relatively safe bets. That, in turn, suppresses U.S. interest rates. And that, in turn, allows Washington to rack up the spending without suffering too much of the consequences. The European Union created the Euro as a means of building a comparably trustworthy currency, but there has never been a true transatlantic challenge to the dollar.
That is because the E.U. was perfectly satisfied with the status quo. Divide the Atlantic, though, and all of this may come crumbling down like a house of cards. Oh, and this is occurring at a time when China and Russia are trying to disrupt the petrodollar. Not great. Staying on the topic of the internationalized dollar and coercion, number seven is sanctions leverage.
The fact that the United States acts as the world’s default intermediary currency grants Washington extra leverage over the financial system as a whole. Namely, the United States can freeze the countries it sees as rogue actors out of those financial institutions. Sanctions often raise mixed feeling among the broader public because the most salient cases are long-running episodes where opponents view them as the cost of doing business. However, what goes unseen are the cases where would-be target states are so afraid of the economic consequences of sanctions that they dare not walk down a path that could cross the United States.
Well, if Washington loses control over the world’s financial system, it will be up to Europe to decide how to handle a given situation. The only upshot here for the United States is that Europe has similar preferences regarding the most likely of targets, so Washington will mostly lose the nuance of which exact sanctions to implement, rather than the decision to implement sanctions at all. At number eight we have the European markets and all 449 million people living in the European Union. It is not just arms shipments to Europe that are in danger. In 2024, the United States exported $376 billion worth of goods to the European Union, and another $463 billion in services. I am included in that latter category.
Thanks to my 7.3% of viewers from the United Kingdom, 4.1% of viewers from Germany, and 3.3% of viewers from the Netherlands. Please don’t leave me. Personal feeling aside, this is arguably the most important trade relationship today, because it captures the greatest share of the developed world. However, as much as central governments may try to set economic policy, you cannot force a consumer to buy something that they do not want. And right now, there are a lot of angry Europeans who do not want to buy American products precisely because they are American products.
Just think about all of the consternation going on with whiskey right now, never mind Tesla sales. That risks having the billions of dollars in trade vanish into thin air. At number nine, we have trade going the other way.
The flip side is that $545 billion of goods head stateside from Europe, and another $346 billion in services do too. If you think about why tariffs increase consumer costs, it is not as simple as how they implicitly create a higher production cost for foreign firms. It is that the de facto higher production cost lowers the quantity of goods that the foreign companies are willing to supply. But if you have less supply with no change in demand, prices will go up to compensate.
Well, if Europe cuts off transatlantic trade, it would be equivalent to the United States imposing an infinite tariff: the supply of goods goes down, resulting in higher prices for American consumers. The bright spot here is that European companies like making money by exporting goods to the United States. As such, it would take a monumental split for this to happen. A more likely scenario is that Trump imposes enormous tariffs on Europe in retaliation for some other sanction Europe hits Washington with.
However, as I just said, that would have a similar, though not as extreme effect from the American consumer’s perspective. Finally, number ten: tourism and soft power. Technically, the tourism part could go into U.S. exports to Europe, but the effect goes far beyond a simple drop in revenue for American businesses. For decades, the United States has been the West’s cultural epicenter. People would want to visit the country, take in what it has to offer, and return home with positive memories of their experience.
With that came an incredible amount of soft power for the United States—the ability to get Europeans to go along with what Washington wanted to do, if for no other reason than Washington wanted to do it. Well, that era is over to some degree. And it may take a while for the United States to build back up that goodwill. Thanks again to Ground News for sponsoring today’s video. Be sure to go to ground.news/linesonmaps to get a steep discount off their Vantage plan, or use the QR code on your screen.
And if you enjoyed this video, please like, share, and subscribe, and I will see you next time. Take care.
2025-03-26 07:31
