Dear EU, react like the American colonies

All of the United States’ traditional allies have had to learn the hard way, at their own expense, to be wary of and fear the Trump Administration. Without exception – those in America and those in Europe, right down to all the Gulf monarchies – they had placed their trust in active defence from Washington, to which they had granted numerous military bases in exchange for their commitment to countering Iran and its proxy militias. Instead, the Saudi monarchy and the Emirates have found themselves exposed to Iran’s brutal attacks and a stranglehold on their energy exports, whilst Washington was – and remains – increasingly hesitant about how to extricate itself from a conflict that has made Iran not weaker but stronger.

For Europe, this is a pivotal moment. Until now, Trump’s offensive on borders (Canada, Iceland, Greenland-Denmark), tariffs and military decoupling has been countered by a strategy centred on damage limitation, accepting the American demand to impose zero tariffs on US exports whilst European exports to Washington are taxed more heavily. The prevailing view – particularly strong in some European governments, such as Italy’s – is that we must avoid, as far as possible, using the same ultimatum-like and coercive tone towards Trump that he reserves for the EU; we simply need to wait patiently for American voters to set things right between the mid-term and presidential elections. But this is a serious mistake. Trump’s imperial presidency – which explicitly uses the threat of tariffs and technological measures, primarily against traditional allies, as powerful levers to serve the strategic primacy of US interests – is not to the liking of a growing number of Democratic opponents and major US corporations. The focus of opposition to Trump lies in his continual attempts to undermine – for his own political and financial gain – the balance of powers enshrined in the US Constitution, right up to his repeated attempts to meddle in elections and deploy armed militias outside polling stations to prevent immigrants from voting. It is not about foreign policy, nor his relationship with Putin. European leaders must therefore seriously consider a strategic redefinition of their relationship with the US – one that will endure for years and is not subject to the capriciousness of whoever occupies the White House. And to achieve this, there is no need for dramatic rifts, but rather clear ideas and a firm tone. Precisely those employed in the illuminating speech by Canadian Prime Minister Mark Carney, in which he endorsed the proposal to make his country an associate partner of the EU: “We are not proposing a third bloc to rival a major power. We are not seeking power to dominate others. On the contrary, we are pursuing resilience so that no one can control our open markets, compromise our sovereignty, threaten our territorial integrity, or undermine our democracies and the rule of law. We want an alliance defined not by what it opposes, but by what it stands for: freedom, solidarity, prosperity and sustainability.” The question is: are the leaders of the major EU countries prepared to speak this same language, to draw up a serious plan that, on this basis, will last for years?

One should never force historical comparisons. However, in many respects, EU countries today find themselves in circumstances that are in some ways analogous to those faced by Britain’s Thirteen American Colonies from 1760 onwards. When, with the treasury depleted by the Seven Years’ War, the governments in London began to impose restrictions on colonial exports through tariffs, whilst simultaneously increasing taxation through measures such as the Sugar Act of 1764 and the Stamp Act of 1765, loyalty to London – which had never really been called into question in the Colonies – soon gave rise to increasingly widespread popular protests, and those who would later become the Founding Fathers of the American Constitution immediately began to write pamphlets that were at first thoughtful but later became increasingly impassioned, based on the principle of ‘no taxation without representation’. King George III actually considered it excessive and perhaps illegitimate – as we only learnt when Queen Elizabeth II granted access to the vast collection of George’s private writings held in the Tower of Windsor Castle – to seek to impose both duties and additional taxes on the Colonies. However, unlike Trump, George III had been, from a young age, a staunch advocate of the balance of powers as a cornerstone of British institutions, designed to prevent a return to absolutist monarchs following the Glorious Revolution of 1688; consequently, he never felt inclined to openly oppose governments that held a majority in Parliament. Consequently, although forced to repeal the Stamp Act, the governments in London became increasingly deaf and unyielding towards the Colonies, which had initially sought a civilised resolution; the Colonies, in turn, became equally unyielding in their determination to pursue independence, taking up arms against the British and their Hessian mercenaries, until the British were finally defeated at Yorktown in 1781. As in all wars, the independence movement resorted to increasingly extreme rhetoric. The 28 charges against George III, which form the second part of the American Declaration of Independence adopted by the Colonies on 4 July 1776 and drafted by Thomas Jefferson, are now historically unfounded. George III was the exact opposite of the reincarnation of Charles I, whom he abhorred, but his respect for government and parliament led him to lose America.

Why this historical preamble? The reason is that Trump is imposing conditions on Europe that are not dissimilar to those which the governments in London imposed on their colonies. In our case, this does not involve resorting to armed conflict. Rather, it involves forging a new alliance with non-EU countries – allies of the US who are subject to the same kind of harassment as we are – so that, in the future, we may re-establish a more equal and stable partnership with the US. Historically, U.S. independence did not prevent a subsequent very close partnership with London; the Americans intervened in both the First and Second World Wars and played a decisive role. This is the very same objective Europe must aim for today. It must also capitalize on another current situation that has no historical precedent: never in the entire post-war period have global markets been as wary of the U.S. as they are today.

Almost two years into President Trump’s second term, the global economy is increasingly seeking ways to distance itself from America. Concerns over a debt burden of 40,000 billion dollars, the excessive use of sanctions to resolve foreign policy issues, and Trump’s propensity to overstep the bounds of the rule of law are raising questions about the United States’ appeal as a safe haven for global investment. Despite the huge commitments made by multinationals, companies and foreign nations to invest in the United States in order to curry favour with the White House, global capital and investors have begun to seek alternative destinations. Wars, energy shocks and the United States’ use of the dollar as a weapon through financial sanctions are prompting institutional investors to seek to diversify their portfolios away from dollar-denominated assets. Of course, the US is not yet regarded as an unmanageable risk. Rivers of money from abroad continue to flow into US financial markets and shares, whilst artificial intelligence infrastructure is expanding at a rapid pace. Treasury Secretary Scott Bessent remains confident in the credibility of the U.S. financial system, arguing that bond auctions continue to be successful and that the dollar is still thriving.

But several cracks are beginning to show. Yields on 10-year Treasuries continue to rise as they are sold at auctions, having exceeded 5 per cent – the highest level since 2007. The Fed’s rate rise a few days ago, limited to just 25 basis points, is failing to instil confidence in the central bank’s ability to keep inflation under control and is not halting the ongoing turbulence on the bond markets. Nor is the Treasury’s return to buying long-term government bonds, which appears to be a last-resort measure that does not allay concerns but rather confirms them. With the U.S.’s long-term fiscal position unstable, it is no coincidence that the Norwegian sovereign wealth fund – the largest in the world – has stated its intention to reduce its holdings of U.S. Treasury securities, in search of higher but safer returns elsewhere.

The proportion of dollars held in central bank reserves has been falling steadily over the last decade; by the end of 2025, it stood at 56 per cent, compared with 64 per cent in 2015. If Europe were capable of taking bold economic decisions, it would be a golden age for the euro. The more the United States intensifies its use of sanctions to resolve global conflicts, the more the dollar’s status as the world’s reserve currency is called into question. When Bessent announced ‘Operation Economic Outcast’ in August – aimed at strangling the Iranian economy by threatening secondary sanctions against anyone maintaining economic ties with Tehran – Bessent himself had to admit that, should Washington be forced to carry out this threat, it could ‘blow up the global financial system’.

In full view of everyone, China and Russia are working tirelessly on cross-border digital currency platforms with Asian and Arab countries, bypassing SWIFT and its traceability and control mechanisms for international payments. Circumventing the dollar-based system is now, technologically speaking, far less costly and risky than it was in the past. Another sign of mistrust towards Trump’s US is that, by 2025, global international reserves held in gold will have exceeded official foreign holdings of US Treasury securities. This month, the Dutch Central Bank stated that it had transferred a large portion of its 95 tonnes of North American gold reserves out of the United States, citing “growing geopolitical tensions” and the need to be prepared for a crisis. In March, the Bank of France stated that it had withdrawn 129 tonnes of gold from the Federal Reserve Bank of New York to transfer it to Paris.

How is Europe reacting to all this? A week ago in Vienna, ECB President Christine Lagarde sadly reeled off a series of figures highlighting Europe’s persistent lack of growth. European capital invested in American AI hyperscalers reached 440 billion euros last June. Europeans continue to hold over 10,000 billion euros in bank accounts, whilst 80 per cent of individuals and households hold no shares, bonds or investment fund units. European funds clearly prefer to invest in U.S. tech giants by participating in their funding rounds via IPOs, or by subscribing to their bonds, which are now issued not only in dollars but also in euros. Meanwhile, in Europe, when France’s leading AI company, Mistral, went to the markets a few weeks ago for a funding round that raised 3 billion, no retail investor was able to participate because Mistral has no listed securities. Of the 150 billion grandly announced in February 2025 to fund the EU’s AI Strategy – 50 billion from EU funds and 100 to be raised on the markets – only 6 billion had been allocated to concrete projects by last June. If this continues – with the Commission stuck in its convoluted rules and hyper-regulation – the risk of industrial desertification was not even mentioned once by von der Leyen in her State of the Union address – Europe will be unable to build a new shared platform that redefines the Euro-Atlantic political, military and commercial partnership, and will remain an economic and financial dwarf, failing to capitalise on the growing global mistrust towards the United States.

We must embrace Carney’s tone and proposals and swiftly build up enhanced cooperation with those both within and outside the EU on defence, security, AI, rare earths, precious metals and energy. For the first time, different states should jointly issue public debt to support common projects, given that there is no consensus to do so within the Eurozone as such. However, we need new founding fathers capable of inspiring the peoples of Europe, just as Jefferson, Hamilton, Benjamin Franklin and Thomas Paine did in the American colonies. Trump’s follies must be countered by inventing and building, not by fawning, wait-and-see attitudes.

Never in the entire post-war period have global markets been as wary of the US as they are today. Despite the huge commitments made by multinationals and foreign nations to invest in the United States in order to curry favour with the White House, global capital and investors have begun to seek alternative destinations

We need new founding fathers who know how to write and inspire the peoples of Europe, just as Jefferson, Hamilton, Benjamin Franklin and Thomas Paine did in the American colonies. The response to Trump’s follies lies in inventing and building, not in obsequious wait-and-see attitudes.