Key Takeaways:
European leaders are accelerating the most significant de-Americanization of the continent's defense and technology infrastructure since World War II.
European leaders held an emergency five-hour session in January at the European Council headquarters in Brussels — dubbed "therapy night" by participants — to discuss how to manage a potential rupture with the United States after President Donald Trump's actions, according to officials present and detailed notes reviewed by The Wall Street Journal. The meeting marked a turning point in transatlantic relations that has since reshaped NATO's spending targets and triggered a continent-wide push to reduce reliance on American technology and military power.
"The old America isn't coming back," Canadian Prime Minister Mark Carney told European leaders in private messages, using a British phone number from his time in London, according to multiple officials. Carney, a former central banker who formulated a thesis about Western overreliance on a single country after the 2008-09 financial crisis, became a key voice pushing Europe toward what some leaders called "de-Americanization."
NATO Secretary-General Mark Rutte pursued a different strategy. At a February 2025 meeting at Brussels' 16th-century Egmont Palace, Rutte proposed allies raise defense spending to 3.5% of gross domestic product — roughly what the US spends — as a middle ground to appease Trump, who had demanded 5%. By June, Trump's new NATO ambassador, Matthew Whitaker, delivered a harder line: 5% by 2035, with an additional 1.5% of GDP for "security-related investments" like airport runways and cybersecurity. The alliance ultimately agreed at the June 24 summit in The Hague, though Spain refused to commit and was allowed to follow "its own sovereign path."
The shift carries enormous market implications. European governments are now spending hundreds of billions of dollars to build their own private space firms, AI companies and data centers, reducing dependence on US juggernauts like Microsoft and Amazon Web Services. Authorities from France to the Netherlands are removing American software from government systems, adopting European open-source alternatives and urging civil servants to stop using Microsoft Teams and Office. European defense contractors stand to benefit most: the 5% target implies hundreds of billions in additional annual spending across the continent, with NATO's European members currently spending about 2% of GDP on defense, or roughly $350 billion combined.
Historical context
The last time Europe undertook a comparable military buildup was during the Cold War, when NATO members consistently spent 3% to 4% of GDP on defense through the 1970s and 1980s. After the fall of the Soviet Union, spending declined steadily, bottoming at about 1% of GDP for many members by 2014. Russia's invasion of Ukraine in 2022 reversed that trend, pushing spending back above 2%. The current 5% target, if implemented, would represent the highest sustained level of European defense investment in modern history.
Trump's August 2025 Alaska summit with Russian President Vladimir Putin deepened European alarm. An intelligence report circulated among European capitals detailed commercial and economic plans the Trump administration was pursuing with the Kremlin, including jointly mining rare earths in the Arctic. By March 2026, when Trump launched airstrikes on Iran that spiked fuel prices across Europe, even Italian Prime Minister Giorgia Meloni — previously the most Trump-friendly leader in Europe — conceded the president "is not reasonable," according to leaders present.
What's at stake
The unraveling of the transatlantic alliance carries risks for both sides. For Europe, replacing America's nuclear umbrella and military logistics would require spending more than 10% of GDP on defense, Rutte has warned. For the US, European de-Americanization threatens the dominance of American technology giants and defense contractors in a market worth hundreds of billions annually. The US dollar could face structural headwinds as allies diversify reserves and payment systems away from American control.
NATO's annual summit this week in Ankara, Turkey, will test whether leaders can preserve the alliance's core functions as deepening mutual distrust strains relations. European intelligence agencies have warned their governments that the Trump administration operates as "a single volatile individual" rather than a process-driven institution, per a Southern European assessment. Britain's MI6 described the White House as "'The Crucible' meets 'Wolf Hall'" — referencing the Salem Witch Trials and the court of Henry VIII — and instructed staff not to discuss the president with their CIA counterparts.
This article is for informational purposes only and does not constitute investment advice.
