EU faces defining six months as Trump doctrine, trade tensions test strategic autonomy

BRUSSELS (CN) — Cyprus took over the European Union’s rotating presidency on Wednesday, inheriting an agenda dominated by a grinding war in Ukraine, stalled efforts to revive the bloc’s economic competitiveness and a transatlantic relationship that’s more fraught than anyone can remember.

The next six months will see the EU try to implement a controversial trade deal with Washington, finalize a 25-year-old agreement with South American nations, keep Ukraine funded and armed while peace talks pick up steam and revamp economic reforms meant to keep Europe competitive with the U.S. and China.

Trump’s shadow looms large

The transatlantic relationship will dominate European thinking through June despite last summer’s trade deal. That agreement capped tariffs at 15% for most European goods but came at a cost: the EU committed to buying $750 billion in U.S. energy over three years and pledged $600 billion in investments, getting almost no reciprocal market access.

Digital regulation adds another layer of friction. Brussels fined Elon Musk’s X platform 120 million euros in December for violating the Digital Services Act. Secretary of State Marco Rubio called it “an attack on all American tech platforms,” and the Trump administration has flagged both that law and the Digital Markets Act for potential retaliation.

European officials will spend the coming months trying to stem this flow while negotiating better terms where the trade deal fell short. But Trump’s foreign policy — from threats to seize Greenland from NATO ally Denmark to last week’s capture of Venezuelan President Nicolás Maduro —has made strategic planning nearly impossible.

“Europe will probably continue to be reactive,” Ian Bond, deputy director at the London-based Centre for European Reform, told Courthouse News. “It is hard to break their defense dependency on the U.S., so they won’t want to take precipitate steps.”

The Greenland threats carry existential implications. “Even if legally NATO continued to exist, it would effectively be destroyed — an alliance designed to defend its members against armed attack could not survive the impact of its largest member attacking one of the other allies,” Bod said.

At Wednesday’s ceremony in the Cypriot capital of Nicosia, EU Council — co-legislating body along with the Parliament — President António Costa said Europe will not turn a blind eye to violations of international law “whether in Cyprus, Latin America, Greenland, Ukraine or Gaza.”

“The [test] is whether European governments move beyond rhetorical solidarity with Denmark and begin coordinating a more assertive political and security response to U.S. pressure or whether the episode is quietly accepted as yet another expression of the structural power imbalance within the alliance,” said Pablo del Amo, a foreign policy fellow at the Madrid-based Elcano Royal Institute.

The Venezuela operation has been particularly destabilizing. Trump’s invocation of the 19th-century Monroe Doctrine — dubbed the “Donroe Doctrine” — and his warnings to other Latin American governments signal an American approach that European diplomats thought was history. With China watching closely and analysts asking whether Beijing might take a similar approach toward Taiwan, the implications reach well beyond Latin America.

Mercosur in the shadow of Monroe

The fate of the EU-Mercosur trade deal will likely be decided in the coming days, with European Commission — the EU’s executive body — President Ursula von der Leyen reportedly ready to fly to Paraguay as early as Monday to sign the agreement if member states give the green light.

The deal with Argentina, Brazil, Paraguay and Uruguay would create the world’s largest free-trade zone, covering 780 million people and eliminating tariffs on 91% of goods traded. Germany and Spain are pushing it to diversify trade relationships and cut dependence on China for critical minerals.

Oscar Guinea at the Brussels-based European Centre for International Political Economy said the agreement carries significance beyond tariff schedules: “There is a reputational angle, and there is also a geopolitical angle in terms of China and the EU ability to show that international trade and agreements based on the rule of law still matter and can be done between countries.”

Failing to finalize Mercosur risks pushing South American economies closer to Beijing as China rethinks its Latin America strategy in response to U.S. moves. Yet the deal faces fierce opposition from farmers who say it will flood European markets with cheaper products that don’t meet EU standards.

The European Parliament still has to ratify it — a process that could take months.

Ukraine negotiations enter critical phase

European support for Ukraine will face its biggest test since the war began. At a Paris summit Tuesday, the “Coalition of the Willing” — Ukraine’s allies including the U.S. and European partners — outlined a framework for post-war security guarantees to deter future Russian aggression.

The framework envisions Ukrainian forces as the first line of defense, with European partners providing long-term assistance and a multinational force helping rebuild Ukraine’s military. But critical details remain unresolved, including force size, deployment speed and the extent of Washington’s participation.

Del Amo said the real test is whether Europe can assert diplomatic agency: “If the United States remains the primary military guarantor and the main interlocutor with Moscow, Europe risks having its security order shaped without meaningful European input.”

The EU is fast-tracking Ukraine’s accession to the bloc, viewing membership as central to lasting peace. At Wednesday’s ceremony, Ukrainian President Volodymyr Zelenskyy said Cyprus’s presidency should open negotiating chapters for both Ukraine and Moldova. “Accession is central to any peace deal, as the key foundation for Ukraine’s future prosperity and development,” he said.

Money remains equally pressing. The EU has committed 90 billion euros for 2026-2027, bringing total support to more than 187 billion euros. But Ukraine needs $120 billion for defense in 2026 alone, with half expected from partners.

The EU’s 800 billion-euro defense plan aims for full readiness by 2030, but Europe meets only 50% of NATO capability targets and faces bottlenecks in military mobility, skilled workers and Chinese material dependence.

The competitiveness reckoning

In September 2024, Mario Draghi — the former crisis-era European Central Bank president — laid out the damage: Europe is losing startups to friendlier markets, paying electricity prices two to three times what American companies pay and falling behind in innovation.

Despite inflation hitting the ECB’s 2% target in December, underlying cost disadvantages remain acute. Draghi called for 800 billion euros in new annual investment — about 5% of EU GDP — to close the gap through modernized energy infrastructure, completed capital markets union and reduced red tape.

More than a year later, the picture looks worse. Europe has mobilized over 1 trillion euros in commitments, but structural reforms remain stuck. Internal barriers act like a 45% tax on goods and 110% tax on services, according to IMF research. Only 11% of Draghi’s 383 recommendations have been fully implemented.

At the Nicosia ceremony, von der Leyen framed the challenge in stark terms. “The European Union itself was born from conflict. Our union is not perfect, but it is a promise,” she said. “It is a promise that cooperation is stronger than confrontation. That law is stronger than force.”

European officials expressed determination to chart a path toward “strategic autonomy” — the ability to act alone when needed while working with partners. Whether six months is enough to make that real will shape Europe’s trajectory for years.

Courthouse News correspondent Yuval Molina is based in Brussels, Belgium.