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Transatlantic rift comes to fore

Economic frictions, defense spending put US-Europe ties to test, experts say

By YANG RAN | CHINA DAILY | Updated: 2025-12-22 09:45
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The decades-old transatlantic alliance is being tested by mixed strains of economic friction, disputes over defense burdens, and even ideological clashes. While experts agree the US-Europe partnership will endure, they warn it is being reshaped by these exposed fissures, a process with global implications.

This year has been particularly bumpy for the transatlantic allies, with tensions flaring across multiple fronts. The latest flashpoint is economic.

In December, the European Commission launched two antitrust probes into US tech giants Google and Meta, and fined Elon Musk's platform X 120 million euros ($140 million) in its first noncompliance decision under the Digital Services Act.

In response, the US administration threatened countermeasures against European companies, with Bloomberg reporting US preparations for a Section 301 investigation. This could pave the way for tariffs or other trade restrictions on major European firms like Accenture, Siemens, and Spotify.

Dan Steinbock, founder of the global consultancy Difference Group, said, "Digital regulation has divided Americans and Europeans for three decades", as the US aims to cement the supremacy of its digital giants, while the EU hopes to foster the rise of European global digital conglomerates.

"Today, the difference is that the economic stakes are far higher as the internet has matured and artificial intelligence is taking off, while globalization has been disrupted. Brussels knows that complacency would allow the US to further entrench its digital leadership," he said.

Sun Chenghao, head of the US-Europe program at Tsinghua University's Center for International Security and Strategy, argued that the multimillion-euro fine on X signals an escalation in the transatlantic battle.

"Future transatlantic relations are likely to resemble negotiations linking rules and tariffs, with digital issues potentially bundled into bargains over steel, aluminum, industrial subsidies, and market access," he said.

The rift extends beyond commerce into the realm of values and ideology. From US Vice-President JD Vance's speech in Munich in February, warning that Europe's greatest threat comes "from within", to the latest US National Security Strategy's stark claim that Europe faces a "stark prospect of civilizational erasure", the rhetoric signals a dramatic shift from alliance solidarity.

The latest US report questions Europe's reliability as an ally and even suggests the US should "cultivate resistance to Europe's current trajectory within European nations".

"Ideological conflict is widening the transatlantic rift," said Jian Junbo, director of the Center for China-Europe Relations at Fudan University. "Europe still clings to the traditional liberal order, which includes the traditional, NATO-supported, US-led Western hegemony and internal unity, and an economic system that is essentially colonialism in the name of liberalism. But the US administration is abandoning this vision."

Jian added, "The US recognizes that the external economic colonialism system is no longer sustainable. If the US can squeeze profits from its European allies, it can partially compensate for the profits lost in the emerging world. Therefore, a more selfish America reflects a fundamental change in the international economic landscape."

Steinbock of Difference Group said the shift in perceptions will compound the existing transatlantic tensions. "Regarding NATO, both Washington and Brussels would prefer the other side to shoulder the risks and costs of NATO's eastward expansion."

Source of discord

NATO, the alliance's premier security platform, has become a major source of discord, as the US administration frequently criticizes Europe for not shouldering sufficient responsibilities within the alliance.

Early this year, then President-elect Donald Trump demanded that NATO member states raise defense spending to 5 percent of GDP, a tall order for European capitals facing tight budgets. By the year-end, US defense officials bluntly demanded that Europe take over most of NATO's conventional defense capabilities by 2027, which some European officials complained was unrealistic.

When the EU proceeded with its "ReArm Europe" plan and "Defense Readiness Roadmap 2030" to bolster its defense industry, it faced immediate pushback. US Deputy Secretary of State Christopher Landau accused Europe of trying to "bully" US defense firms out of the bloc's rearmament efforts.

"In the US, the push for Europe's' military independence' is predicated on the idea that the major economies of Western Europe will engage in massive arms buys from the US," Steinbock noted. "In the short term, that may be the reality. In the long term, it won't be the case."

Sun of Tsinghua University warned that Washington is likely to frame Europe's push for "defense industrial localization" as an issue of alliance fairness. "Disputes will spill over from security cooperation into industrial and standards competition, increasing friction within NATO," he said.

Sun suggested that the root cause of the recent full-on tensions is a divergence in the alliance's "function positioning".

"The US is increasingly emphasizing cost-benefit analysis, domestic politics, and the redistribution of global resources, while Europe still sees the alliance as an anchor for security and order," he said.

Jian of Fudan University said the most critical rift lies in the political realm. "The US administration has sidestepped Europe by negotiating with Russia over the Ukraine crisis, along with a major shift in Russia policy. This has not only heightened Europe's insecurity but also signaled that the US is no longer willing to act as Europe's security guarantor and may become an accomplice to threats against it," he explained.

Despite the seismic shifts, experts stress that the transatlantic alliance will likely endure, though with weakened shared value consensus and more conditional cooperation.

The US National Security Strategy, while downgrading Europe in multiple respects, still acknowledges that Europe remains strategically and culturally vital to the US. EU foreign policy chief Kaja Kallas downplayed the report, stating that Washington remains the bloc's biggest ally and that the two should stick together.

"The transatlantic alliance will remain a long-term fixture," Jian said, citing a shared cultural foundation based on Christian tradition and racial identity, alongside Europe's indispensable reliance on the US for security and critical trade. "The alliance is a necessity for Europe, supported by powerful shared interests and identity. It will not become fragile because of these rifts."

Sun echoed this sentiment, suggesting that while the transatlantic alliance will endure, it will shift from a state of "automatic stability" to one requiring "repeated recalibration".

Their future alliance relations will be more transactional, with the US emphasizing burden-sharing and conditionality, and Europe emphasizing autonomy and rule sovereignty, allying more like a renewable contract than a default community, he said.

Experts said that as the transatlantic alliance reshapes, the world order will evolve toward multipolarity and multilateralism, but may also face increased uncertainty.

Sun suggested that US-Europe tensions will produce spillover effects. "Coordination costs within the West will rise, leading to more fragmented global governance. Overall, the international system will move closer to a multicentric competitive landscape with partitioned rules, raising the risks of miscalculation and chain-reaction retaliation."

Agencies contributed to this story.

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