The facilitation of easy and free trade, once the heart of the neoliberal western order, is no longer a central objective of statecraft in Washington. Instead, trade has been deployed as a broader foreign policy tool to secure concessions to resources, achieve territorial claims, and effect political change. Washington's willingness to sacrifice economic harmony in pursuit of territorial claims involving a long-standing ally has prompted a broader realization within the EU: the buzzwords of “strategic autonomy” and “de-risking,” historically associated with China relations, now needed also to apply to the U.S. President of the European Commission Ursula von der Leyen referenced this in her World Economic Forum speech in Davos, stating that the EU chooses “free trade over tariffs,” “partnership over isolation,” and is “serious about de-risking our economies.”

While the early-2026 tensions over Greenland have accelerated this de-risking, the EU had already begun reducing its dependencies. Key examples include accelerated trade diversification with Mercosur and India; increased defense spending by member states and through EU-level initiatives such as Security Action for Europe (SAFE); a growing focus on energy sovereignty not only from Russia but also from the U.S.—for example, through the promotion of homegrown clean tech under the Net-Zero Industry Act; and the development of the digital euro as an alternative to U.S. payment providers. Together, these examples highlight four key areas in which the EU is expected to accelerate its push for strategic autonomy vis-à-vis the U.S.:

1. Trade diversification
2. Defense sovereignty
3. Energy sovereignty
4. Tech sovereignty.

Below, we outline some plausible implications of accelerated de-risking from both geoeconomic and business perspectives.

Geoeconomic Implications

The shift toward European strategic autonomy is likely to gradually reshape international trade patterns, as the EU’s relative share of trade with the U.S. declines in favor of a more diversified global portfolio supported by new free-trade agreements. This transition integrates middle powers more closely with the EU, as these countries also seek to hedge against U.S. protectionism, contributing to the broader move toward a multipolar world order, eroding U.S. hegemony, and reinforcing the EU’s role as a global standard and regulation setter. However, the realization of benefits and the reorientation of trade patterns will take time, as trade volumes often start from a low baseline and investments require a longer horizon to yield returns. Additionally, accelerating new free-trade agreements in response to current crises poses longer-term challenges for EU internal politics, particularly through domestic backlash against the offshoring of jobs and industrial capacity to lower-cost countries.

The path toward sovereignty in energy, technology, and defense will be challenging and generate significant trade friction with the U.S. over the coming years. In the energy sector, the EU’s efforts to diversify LNG sourcing toward partners such as Qatar and Canada, is likely to create tensions, particularly as the EU falls short of the aspirational purchase pledges outlined in the Turnberry agreement. The push for EU tech sovereignty—likely including “Buy European” preferences and subsidies—will negatively affect U.S. tech firms, which benefit from strong backing of the current administration. Similarly, the pursuit of defense sovereignty, through the development of independent European defense capabilities and defense-industrial cooperation, may heighten transatlantic tensions, as it challenges the market position of U.S. defense companies. Given these companies’ and sectors’ central role in the U.S. international trade position and their strong ties to decision-makers in Washington, European protectionist measures in these areas are likely to trigger accusations of unfair practices and a cycle of trade disputes, further straining the transatlantic trade relationship as the EU advances toward strategic autonomy.

Business Implications

The acceleration of trade diversification and the push for sovereignty in key sectors carry significant implications for both EU and foreign businesses. The EU’s likely path toward achieving sovereignty in these sectors includes internal reforms, such as deeper integration of capital markets; stronger industrial policy measures, including “Buy European” preferences; and increased public financing, for example, through higher defense spending. These measures create substantial opportunities for EU-based companies while frequently imposing negative impacts on foreign firms.

Trade Diversification

Newly opened markets provide EU exporters with opportunities to expand and hedge against volatility in transatlantic trade, although the speed and scale of diversification are constrained by the sheer size of U.S. demand, which cannot be easily replaced. New free-trade agreements also create cost arbitrage opportunities, allowing production in lower-cost countries with tariff-free access to the EU market. However, trade diversification introduces new risks to EU companies’ supply chains. For instance, the recently signed strategic partnership between the EU and Vietnam reflects the EU’s intent to enhance high-tech cooperation, with Vietnam positioned to become a significant high-tech manufacturer over time, supported by Western investment. While deeper integration with Vietnam can reduce direct supply chain exposure to China, indirect exposure will persist, as Vietnam remains closely linked to Chinese supply chains and continues to hedge its position through cooperation with Beijing.

Defense Sovereignty

Rising defense budgets across EU member states are creating increased demand for defense and dual-use products, with dual-use technologies providing new opportunities for companies traditionally serving commercial markets, as many commercial technologies translate well into defense applications (for example, drones use components very similar to those found in many consumer electronics). While the U.S. defense sector continues to play a significant role, public procurement increasingly favors EU-made goods over time. Resilient supply chains, especially those free from dependence on China, becomes a key competitive advantage for EU defense contractors.

Energy Sovereignty

With the EU lacking significant natural resources, it is likely to maintain a strong focus on the green transition to support energy sovereignty. Heavy reliance on China in clean technologies is expected to prompt industrial and trade policy measures aimed at developing a homegrown clean-tech sector, both to strengthen energy sovereignty and to reduce dependence on external sources, including U.S. LNG. Nuclear energy is also expected to play an important role in a diversified energy mix, driving increased demand for nuclear plants.

Tech Sovereignty

In the short term, EU providers benefit from partnerships with U.S. companies to deliver the first generation of EU-owned and operated services. “Buy European” preferences further strengthen the competitive position of EU providers, though they introduce some inefficiencies into the economy. Over the longer term, EU tech companies gain from capital market reforms that expand available financing within the EU, reducing reliance on U.S. capital markets.

De-risking does not equal decoupling

These plausible developments do not imply that the EU and the U.S. will “decouple” in any meaningful sense. Both sides remain committed to the transatlantic trade relationship. The EU’s trade responses over the past year have consistently prioritized preserving the relationship and providing an off-ramp from escalation. Likewise, the U.S. National Security Strategy, which drew a lot of attention in Europe, affirms that “Transatlantic trade remains one of the pillars of the global economy and of American prosperity.” Rather than decoupling, the EU is engaging in a gradual, targeted de-risking aimed at reducing the most critical dependencies.

Obstacles and Surprises Along the Way

To achieve its goal of strategic autonomy, the EU needs to overcome several obstacles:

• Internal reforms: Complex internal reforms toward a more centralized, integrated, and stronger Union are needed. But this creates a dilemma: Brussels needs to secure a stronger mandate amid a time when its effectiveness is questioned by some member states. For example, despite being the second largest economy in the world, Brussels could not secure the most favorable agreement with the U.S. nor effectively defend itself from China’s rare earth leverage. How can Brussels secure a stronger mandate when many member states see benefits as marginal at best?
• Navigating internal divisions: Holding together diverse coalitions is inherently challenging, as illustrated by the Mercosur saga. First, the EU was divided along differing economic interests: Germany pushed for the deal to support automotive exports, while France and Poland sought to block it over concerns about their domestic agricultural sectors. Second, the European Parliament’s decision to refer the Mercosur agreement to the European Court of Justice demonstrated that political coalitions spanning multiple ideological groups can act as blockers. In this case, the coalition included the EU-skeptic wing, the Left, and the Greens, but also encompassed a significant number of MEPs from the largest groups, EPP and S&D, representing countries opposed to the agreement. In a bloc of 27 countries with diverse cultures and varying stages of economic development, internal divisions will persist and continue slowing the pace of decision-making.
• Fundamental shifts: De-risking is also likely to require the EU to adjust certain value-based policies and moderate climate initiatives in favor of realpolitik, in order to address the three key threats facing the bloc: Russian aggression, China’s impact on EU industry, and a weakening transatlantic alliance. Such shifts are fundamental for an institution founded on values and high-level ideals and are therefore likely to encounter internal opposition.

Furthermore, things change quickly, especially as the world is moving toward a multipolar order. As such, nothing is guaranteed and new developments can alter the trajectory along the way. But some things are clear: the transatlantic trade environment will remain volatile over the next years, geopolitics and geoeconomics impact companies significantly offering both risks and opportunities, and companies need to both prepare for these changes, and to monitor and adjust continuously.

‍