Different European states want different things out of the US relationship. The Baltic states need to avoid a losing game of attrition with Russia, likely starting with an invasion of little green men. (I can’t imagine a direct invasion like Russia tried in Ukraine). Italy likely wants to sell stuff to America. The UK needs both defense help and is probably still fantasizing about some trade deal. Germany needs the export market. It may be easy to agree on the idea Europe should respond as a general principle. But the large coalition makes choosing a specific action hard, as the retaliation could come in a way that hurts one member much more than the other. A collapse of NATO, which I suspect may be inevitable, would hurt the Baltic states more directly than, say, Spain. While a tariff war would hurt Italy and Germany at a time when their economies are struggling.

More trade with China might make some countries happier, but would be a threat to the German industrial base. And, frankly, if Europe wants to have security, they need an industrial base. In fact, they need both a low tech base for shells and artillery tubes, and a high-tech base for drone and counter-drone operations. They are sensitive to energy demand, but pushing South to Africa may mean getting involved in stabilizing their trading partners. That would require them to build the military capability to project strength down to Africa. This might be culturally difficult for some countries, although some compromises are easy when shivering in the cold is your other option. I could imagine Italy, France, and Spain working to secure energy supplies from Africa, but I can’t imagine the average UK or Finnish voter wanting to do the same. And they would have to compete with China and Russia. Maybe as part of a broader trade deal, a push to establish a military presence to the South might have some appeal.

Europe’s numbers are not great from a demographic standpoint. From a GDP and population standpoint, they compare favorably with the US. They have about 120,000,000 more people than the US. They have good technical skills and educated populations. They could offset the demographic issue with automation. However, the US holds a lot of the technology cards. But upending trade deals around IP law, such as weakening patent protections or allowing companies to reverse engineer products, could backfire for some countries, particularly the Nordics. But there might be an area of broad compromise, if they tax digital services that are largely provided by the US, such as on-line advertising. Depending on the company they make between a quarter and a third of their revenue from Europe. This could be billions of tax dollars in short order. But despite the valiant efforts of Schleswig-Holstein, it’s unlikely they could do away with Microsoft, Google, and AWS, entirely.

One thing that is certain, it is unlikely they can defeat the US in an armed conflict. For one thing, they spend just over half of what the US does on defense. For another, they depend on US weapon systems that can be deactivated by the US. This has been a great deal for US defense contractors. And future business for those contractors could be a point of leverage. The US also provides and manages a lot of the space based assets for NATO, along with intelligence. The EU does not have the infrastructure to fill that capability gap. In fact, the US is key to command and control. The EU has a much better arctic capability, but the US can just overwhelm with numbers and technology. In addition the size of the US surface and submarine fleet would deny Europe access to Greenland.

The one thing Sweden, Germany, and Poland could do is to develop a nuclear capability. But a nuclear capability is more than just making bombs. The actual bomb itself is well within the capability of Swedish, German, and Polish engineers. And they have economies or a specific need to quickly develop a bomb. Maybe it takes longer with Poland due to their limited budget, but the would be motivated. Next they need a delivery vehicle, which would likely be a cruise missile or IRBM. Submarine launched missiles would take a while longer. The UK, although it does have nuclear warheads, they travel on US missiles. That would need to change to have a complete solution. And for a second-strike capability, submarines are a better fit. Of course, like many projects, it depends on the focus and execution by the member country. If they start by hiring a company to write the request to set up an office to manage the project to design the 50 year plan for a nuclear deterrent, in order to set the parameters for a European nuclear policy, they’ll fail. They need to skunk-work it through, quickly, quietly, and in a way that denies Russia the ability to use nuclear extortion to stop the project.

Depending on the escalation, it’s not that the US is invulnerable. Although the majority of American debt is held by Americans, the Europeans hold much more of the debt than China. They don’t have to set much of it alight to cause problems for the US. It’s likely they have a carrot here, as well as a stick. Without willing buyers at the long end of the yield curve, US interest rates will struggle to drop. Long term rates are actually rising even though rate cuts are likely (something of which I am painfully aware). Europe can offer to purchase an additional tranche of US debt with maturities in the 20-30 year time-frame. And if the US attempts to backslide, they can quickly stop their purchases. It would push down long term rates, as the supply of long bonds is a little constrained. The paper issued by the treasury for the last few years has been in the short end of the market. The US is not a default risk (although there are some people in the US who think that’s a possible policy). It is an interest rate and inflation risk, with inflation and currency devaluation being the fastest way out of its high debt levels.

It’s not that there aren’t a lot of solutions. Some better than others. And the Europeans have been good negotiators. Access to the US market has been the major carrot the US trade negotiator has used with Europe. But the existing tariffs, and constant threats of additional tariffs, have soured the taste of that carrot. The difficulty is finding something the member countries (including some that lean toward Trump) can agree upon. I’m sure some Europeans imagine that once the mid-term elections happen, Trump will be checked. That he has, at most, another year of being able to act before the next Congress takes their oaths. But let’s say the Democrats who win also have a populist streak, or the Republicans are able to rally and hold the Senate. The ability of Democrats to “stop Trump” would be muted. And a future election could bring another edition of an anti-European, populist leader. I would look at Trump as evidence of the sentiment lurking in parts of the US toward the rest of the world. And that in the face of a “might makes right” bully, having the moral high-ground is not as good as being able to lay out the bully. That needn’t be militarily. But the reliance on the US, especially for technology, can’t be a continued modus operendi for Europe. But the status quo is a lot easier than a new direction, when so many different voices have the power to say ‘no.’