The European Union is not merely being pressured; it is being reshaped. Its industrial base, strategic autonomy, energy transition goals, and monetary sovereignty are all under strain, Kashif Hasan Khan writes.
In geopolitics, outcomes are seldom driven by facts alone. They are shaped by political, economic, and social needs. What does a society demand? What narratives direct its politics? What apprehensions drive policy? Those who can read these signals early are the ones who anticipate systemic shifts. Europe, unfortunately, appears to have misread them—twice.
During Donald Trump’s first presidency, trade wars redrew the global economic map. China was the primary target, but Europe assumed it was shielded by shared Western identity and long-haul solidarity. That illusion shattered when Trump’s own National Security Strategy portrayed Europe not as a strategic partner but as a declining civilisation, more museum than motor of the future. The message was blunt: alliances were now transactional.
Trump 2.0 has intensified this logic. While headlines focus on tariffs and trade renegotiations, the deeper story is structural. The European Union is not merely being pressured; it is being reshaped. Its industrial base, strategic autonomy, energy transition goals, and monetary sovereignty are all under strain.
From Strategic Partner to Tribute Economy
The new transatlantic arrangement is revealing. US exports to the EU now enjoy near-zero tariffs, while European goods entering the American market face significant duties. Brussels has committed itself to hundreds of billions of dollars of investment in the US, effectively exporting its capital to strengthen American industry. Long-term contracts for US oil and gas, despite Europe’s rhetorical leadership on climate policy, have locked the continent into fossil-fuel dependency under American pricing power. This is not partnership, it is asymmetric integration.
At the same time, China remains constrained by US tariffs and has redirected its excess industrial output toward European markets. Cheap electric vehicles, batteries, and industrial components are flooding the continent. European firms now face pressure from both ends: protectionism from Washington and hyper-competition from Beijing.
Blocking China is not a realistic option. Europe’s industrial ecosystem is deeply embedded in Chinese supply chains, from electronics to intermediate manufacturing inputs. Nor can Europe disengage from the US without incurring immediate costs. The result is strategic compression.
The consequences are already visible. European auto exports are declining. Tens of thousands of jobs are at risk. Firms are engaging in “tariff jumping,” relocating production to the US to avoid trade barriers. Foreign direct investment into Europe has fallen sharply, signalling a loss of confidence in its industrial future. Meanwhile, the strong US dollar is squeezing European households. Imports are becoming more expensive, real disposable incomes are falling, and inflationary pressures are intensifying. The social contract, already weakened by austerity, pandemic disruptions, and energy shocks, is under renewed stress.
Why BRICS Is No Longer Peripheral
BRICS now represents nearly half of the world’s population and an expanding share of global energy, minerals, and manufacturing capacity. If access to the US market is becoming more conditional, and competition with China is intensifying, diversification is no longer optional for Europe, it is existential.
Energy is a prime case. Around 38 percent of global oil and gas flows originate in or pass through BRICS countries. Long-term reliance on US energy—priced in dollars, politically contingent, and strategically weaponisable—undermines Europe’s autonomy. The pragmatic necessity of diversifying energy partnerships has eclipsed ideological considerations.
Capital is another fault line. Europe’s declining FDI reflects waning confidence in its long-term industrial competitiveness. Meanwhile, BRICS countries hold surplus capital seeking stable returns, particularly China and the Gulf countries’ sovereign wealth funds. Strategic investment partnerships could stabilise Europe’s manufacturing base rather than hollow it out.
Then comes de-dollarisation. This is often misunderstood as a revolutionary project. In reality, it is about risk management. Currency swaps, local-currency trade mechanisms, and diversified reserves reduce vulnerability to financial coercion. Europe does not need to abandon the dollar, but it does need options.
Critical minerals further complicate the picture. China controls over 90 percent of rare-earth processing. South Africa dominates platinum. Brazil holds key reserves of niobium and lithium. These resources will define the next industrial era. Dependence without leverage is a strategic liability.
Geography matters too. BRICS countries increasingly sit astride the world’s most vital chokepoints—from the Red Sea to the Persian Gulf to the Indian Ocean. As maritime security becomes politicised, Europe’s exposure grows.
The Valdai Discussion Club was established in 2004. It is named after Lake Valdai, which is located close to Veliky Novgorod, where the Club’s first meeting took place.
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