Europe’s Pivot Away from the US?
February 04, 2026 - Written by Ozan A. Koyas
After the episode of the US trying to acquire Greenland, Europe has a clearer view of its dependence on the United States, and of Washington’s willingness to weaponise that dependence through tariffs and threats against EU sovereignty. In terms of economic coercion, the US’ tariffs on those backing Greenland’s autonomy were significant, 10% tariffs on goods from Denmark, Germany, France, and others, escalating to 25% by June 2026. Even with the Greenland framework suspended these tariffs, strategic autonomy is now becoming an operational necessity to prevent possible future attempts at cohesion.
This attempt to diversify partners has recently been demonstrated by the EU deepening its economic partnerships with China and India in geoeconomic domains (the historical and largest share being in manufacturing but now moving into other sectors such as telecommunications infrastructure and green technologies). While the EU is likely to maintain a distance with Chinese companies over security infrastructure, it would most likely expand its current bilateral deals to further ease the weight of the transatlantic network on its economic security.
The most clear example of the EU putting the transatlantic relationship in question is the suspension of the Turnberry trade deal with the US (over the importation of US industrial and agricultural products) over Greenland threats earlier in January. If the deal had gone through, it would have eased US-EU tariffs in exchange for $250 billion in EU US energy purchases. While ongoing negotiations between Denmark, the EU and the US might save the deal, the EU is already doubling down on its commitments to expand trade with new ‘partners’ in certain sectors.
Europe's China Pivot?
The magnitude of Europe's exposure to Chinese supply chains is both staggering and asymmetric, as it had been for the last couple of years and especially after the Liberation Day tariffs from last year. It is important to look at how the EU's dependence has been increasing in context, which can explain why it is more likely that they would double-down amidst transatlantic uncertainty. The EU's trade deficit with China reached €305.8 billion in 2024 and continued escalating through 2025, with monthly deficits averaging €32.2 billion (daily equivalent of €1.07 billion) as of November 2025. More troubling than the numerical imbalance is the asymmetry of European dependence: China supplies approximately 85–90% of the rare earth elements essential for European industrial competitiveness. While China mines approximately 67% of global rare earths, its true leverage derives from controlling 85–90% of global rare earth processing and refining capacity—a stranglehold that tightened in August 2025 when Beijing extended quota controls to encompass imported raw materials. This processing dominance reaches near-absolute levels in heavy rare earth elements, where China controls approximately 99% of global refining capacity, and in magnet production, where China manufactures 300,000+ tonnes annually compared to combined Western capacity of 70,000 tonnes projected by 2030.
The electric vehicle and renewable energy sectors exemplify this entrapment. European automobile manufacturers like Volkswagen among other Western sectors are already embracing China’s recent EV revolution built up over the past decade - with Volkswagen, among other European manufacturers, also being heavily reliant on the Chinese market for sales. More systemically, Europe's demand for lithium alone is projected to increase 12-fold by 2030, yet Chinese companies have already secured approximately 50% of the world's largest lithium mines, positioning Beijing as a de facto gatekeeper for Europe's climate transition. Moreover, the processing of lithium, transforming it from a raw product into a useable material, is dominated by China processing over 60% of the world’s lithium. Similarly, Chinese battery manufacturers and solar panel producers dominate the technologies essential for Europe's net-zero objectives. While the European Commission pursues alternative suppliers in Latin America, Kazakhstan, and Canada, these partnerships remain nascent and cannot be scaled rapidly enough to offset Chinese supply during critical transition years.
Such structural dependence drives Europe's diplomatic pivot - particularly while Washington is increasingly viewed as hostile and as a unreliable partner. EU-China bilateral trade expanded 5.4% in the first eleven months of 2025 despite geopolitical tensions, reaching €642 billion. What distinguishes Europe's approach from the United States is not reduced engagement, but selective cooperation grounded in differentiation. The EU has explicitly chosen to keep Chinese companies out of critical security infrastructure—telecommunications (as well as US communication software like Microsoft Teams), defence systems, financial networks —while simultaneously deepening economic partnerships in manufacturing, automotive components, and green technology supply chains.
It is however important to introduce a level of balance as the EU still has not fully pivoted away from the US to China, as the EU can not afford to so, due to the EU being reliant on US liquified natural gas, for which more than 50% comes from the US and dependent on access to the US market. To decouple, the EU would require an arduous transition period, as such US dependencies would likely continue to impact its economic environment in the medium term. But the march away from US dependence has begun and is increasingly growing momentum.
How the build-up to the 2026 World Economic Forum (WEF) Confirms EU’s diversification strategy beyond China
Germany, Europe's economic heavyweight, has convened expert panels before the Forum to reassess China trade policies, initially signalling an attempt to better address Chinese dependency. On top of economic tensions between the EU and China as a result of the November 2025 Chinese rare earth curbs, the German Chancellor Friedrich Merz stated at the WEF that Europe must be the antithesis of state-sponsored unfair trade, raw material protectionism, technology bans and arbitrary tariffs. As China is seen increasingly as a dependency in some respects, EU trade deals have extended beyond into India, Mexico, Indonesia, and the Mercosur bloc and are likely to expand.
The EU is India’s largest trading partner, not China, with plans since Von der Leyen’s visit to India on January 26, 2026 to sign a new trade deal, building on EU-India bilateral trade worth $130 billion in 2023-24, with nearly 6,000 European companies operating in India. Regarding Southeast Asia, von der Leyen announced at Davos that the EU is advancing free trade negotiations with Indonesia, Thailand, Malaysia, UAE, and the Philippines—countries positioned to align with EU sustainability standards including the Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR), both of which entered force in January 2026. Additionally, the EU finalised its largest trade agreement with South American Mercosur countries (Argentina, Brazil, Paraguay, Uruguay) on January 17, 2026, after 25 years of negotiations—a transaction explicitly designed to compensate for anticipated losses from US tariffs, despite it being currently on hold in EU courts.
This shift does not mean that the EU decouples from China, it is more of a de-risking strategy to avoid yet another dependency, with still continued yet non-expansive commitments to invest into China. France's Emmanuel Macron has simultaneously called for expanded Chinese foreign direct investment in “key European sectors,” a position that recognises the multipolarity of the current world order, expanding its access to Chinese capital, without the ambition to further integrate into the Chinese economy than Europe already is. It’s an attempt to focus on partners that respect the sanctity of trade agreements and that do not have the interest to weaponise them against their partners.
US Response: Greenland Deals to Counter Chinese (and Russian) Influence?
Although NATO and the US agreed upon a framework to ease tensions by providing US sovereign military bases in Greenland (similar to the 1951 treaty), the EU, as well as Denmark, has stood firm against any further compromise to sovereignty. It is uncertain whether the most recent Danish-US negotiations will amount to a deal in which both parties can agree to a compromise to ease tensions in the short term. As a result of these unsettled points in negotiations, it is likely that the EU would further decouple from US markets, considering that Trump does not fully back down from sovereignty claims. Signs of this move can be seen beyond the stalling of the Turnberry trade deal, to the EU planning on decoupling from US tech companies that dominant both public and private sectors in the EU by developing and expanding European equivalents. Although in the short and medium terms, the EU will remain substantially reliant on the US economically, it is increasingly possible that such continued episodes, which weaken the transatlantic relationship, will in the long-term give the EU the ability to lessen the impact of US economic coercion.
In terms of Western securitisation of the Arctic, it is uncertain whether the transatlantic alliance can be repaired quickly enough to catch up to China’s growing economic and geopolitical influence in the Arctic. Yet, the only way forward in the short term is with a US-EU joint effort, mobilising the collective force of NATO troops and maritime defensive vessels. If a collective security deal between the US and European NATO countries is not developed, China in particular could take this opportunity to challenge the Western alliance and develop key trade and communications infrastructure to influence the Western end of the Arctic, especially when it would become more reliable of a trade route between East Asia and Western European ports.
China's 'Polar Silk Road' advanced via Russia-coordinated Northern Sea Route shipping, with Chinese vessels completing record voyages, one of which successfully arrived in the UK last October 2025. As for Russia itself, its air incursions into the Arctic territories of NATO states like Norway further call on NATO and the EU to reinvigorate Danish forces and secure Greenland’s vast rare earth minerals from any possible future Russian or Chinese exploitation.
Europe’s attempt to rebalance away from US economic coercion, while simultaneously deepening yet de-risking its interdependence with China and other partners, marks a pivotal but still incomplete step toward genuine strategic autonomy. In the Arctic and beyond, however, Europe’s lingering defence and energy reliance on Washington means that any durable recalibration of the transatlantic relationship will hinge on not moving away from one another but reinvigorating the partnership in a way that benefits collective security.
Written by Ozan A. Koyas
Analyst on the Türkiye Research Desk and contributor to European Research Desk