Kathrine Frich
Recent disputes have forced EU leaders to reassess how dependent both sides are on one another.
Officials now openly question whether Europe could exploit weaknesses in the US economy.
A pivotal moment
Every day, more than $5.4 billion in goods and services move between the United States and the European Union, supported by vast cross-border investment, according to The New York Times.
That flow underpins millions of jobs on both sides of the Atlantic.
Although US President Donald Trump has dropped threats of new tariffs linked to Greenland, European officials say the episode exposed vulnerabilities.
On Thursday, EU leaders announced a meeting in Brussels to “coordinate next steps.”
“European leaders cannot act as if the last few weeks have not happened,” said Ian Bond of the Center for European Reform.
“This has been the most serious crisis in transatlantic relations in years, but with Trump in the White House, it will not be the last.”
Selling US bonds
Economists say Europe’s strongest leverage may lie in finance.
European investors hold about $2 trillion in US Treasury debt, according to The New York Times.
“The United States is on an unsustainable debt trajectory,” said Richard Portes of the London Business School.
“That is the main weakness of the United States at the moment, economically.”
Peter Chase of the German Marshall Fund said that if European actions raised borrowing costs for Washington, “then I think that would be something that people should be paying attention to.”
US Treasury Secretary Scott Bessent dismissed the idea in Davos, calling it “a completely false narrative” and stressing that Treasuries underpin the global financial system.
Still, Denmark’s AkademikerPension said it would sell about $100 million in US bonds by month’s end.
Targeting services
Trade in services is another pressure point.
American companies sold roughly $300 billion in services to the EU last year, compared with $200 billion in EU exports to the US, according to US data cited by The New York Times.
That imbalance could be leveraged, said Erik van der Marel of the European Center for International Political Economy.
But he warned that blocking US services could hurt European competitiveness, especially in digital technology.
Several European countries have instead imposed digital taxes on US tech firms, a move that has already angered Washington.
Limits of leverage
Doubts remain over whether Europe can act decisively.
At Davos, Bessent mocked the EU’s slow decision-making, referring to a “dreaded European task force.”
Those concerns resurfaced when the European Parliament delayed a major trade deal with South America.
“It’s an own goal,” said Bernd Lange, head of the parliament’s trade committee.
Sources: The New York Times, German Marshall Fund, Digi24.
