Transatlantic Insecurity: Revaluation of Economic Security Policy’s Business Impacts Amid US-European Turbulence

By John Kay*

The recent foreign policy shifts in Washington have triggered a radical reassessment of the U.S.-European relationship, creating an evolving landscape that the transatlantic business community must closely monitor. U.S. investments in the EU are valued at approximately $3.95 trillion, and the two economies have the world’s largest trade and investment relationship. Yet, the starkly different approaches towards Russia and support for Ukraine raise questions about whether U.S. private sector actors will continue to be viewed as trusted partners by European nations.

In response to the U.S. administration’s new stances, European leaders have begun taking their strategic autonomy to the next level. Under the “Rearm Europe” plan announced by EU Commission President Ursula von der Leyen on 6 March 2025, EU member states will increase defense spending by a planned 800 billion euros. This comes after major increased defense spending plans announced by the UK and German governments. Along with this push for an autonomous defense industrial base, Europe is also scrutinizing its private sector partners in defense and critical infrastructure much more closely. Considering their current market share, this may have a potentially significant detrimental impact on U.S. companies.

The Transatlantic Trust Deficit

The news that Italy and Poland are reconsidering billion-dollar deals with Starlink due to the transatlantic security rift is a significant sign of diminished trust. Growing concern about an alleged “kill switch” feature in F-35s is also mounting in Germany and Canada, forcing reconsideration of U.S. aerospace suppliers. While the defense industry is an initial point of concern, increasing public fears over American corporate control of vital technologies and infrastructure may drive regulators to scrutinize a wider variety of sectors. European officials, in tandem with national-level economic security regulators, including investment screening and procurement in critical sectors, will almost certainly reevaluate a wider array of the American business community’s involvement in Europe. They may feel pressure from public opinion, which is increasingly seeing the U.S. as merely a “necessary partner” rather than an “ally,” according to a recent European Council on Foreign Relations study.

This trend would be troubling for American technology firms, already under close scrutiny by many EU regulators. Companies like Microsoft, Amazon, Google, and Oracle are deeply involved in European critical infrastructure, particularly through their cloud services. These companies provide essential services that support European digital infrastructure and public institutions, including software, data storage, AI, and cybersecurity. Sixty-nine percent of the European cloud market is owned by Amazon, Microsoft, and Google alone. However, the increasing transatlantic rift could create new national security concerns on the part of EU regulators who may prioritize the need for fully autonomous European systems at almost any cost. National security concerns over American technology could serve as a particularly tempting political justification amid broader European calls for a “European preference” in the technology space.

European companies doing business in the United States may also feel disruption from an increasing transatlantic trust deficit. The Committee on Foreign Investment of the United States’ (CFIUS) decision on the Nippon Steel case reminded us that companies from close U.S. allies are not necessarily exempt from national security review. However, President Trump’s “America First Investment Policy” executive order aims to reduce barriers for U.S. allies based on their verifiable distance and independence from China. The specific criteria by which independence from China will be verified have not yet been clarified but will have significant implications for European firms engaging in critical U.S. sectors.

Navigating Uncertainty

Now, more than ever, the transatlantic business community needs to pay careful attention to developments in economic security regulation such as investment screening, export control, critical sector procurement, cybersecurity, and supply chain security. Once considered a niche area of law, economic security policies now have the potential to radically reshape the transatlantic relationship due to the evolving transitions in the security partnership. While changes in these regulations are being accelerated due to the recent transatlantic security rift, they are still evolutions (not revolutions) of earlier frameworks expanded extensively over the past decades. Understanding their structures, genesis, and applications will be crucial to navigate their likely expanded use in the coming years.

Strategic autonomy has been a direction the European Union has been heading for some time, and it is important to remember that ramping up of FDI screening policies in Europe largely stems back to the last Trump administration. For some Europeans, the enhancement of economic security policy was just as much about building security from Beijing and Moscow as it was about building security from what they perceived to be an increasingly unreliable Washington.

Companies on both sides of the Atlantic will need to prioritize steps in the coming months to bolster trust despite the geopolitical circumstances. Trust is key to maintaining a free and open transatlantic business environment. The deep integration of North American and European economies remains a cornerstone of each region’s success. Sixty-two percent of global investment into the U.S. comes from Europe, and approximately sixty-one percent of U.S. global investment goes to Europe. This economic partnership supports millions of jobs and is a critical component of each region’s tax base. If these deep-rooted relationships are to continue, companies should also invest in building stronger relationships with their transatlantic counterparts and demonstrate their commitment to shared values and goals.

Common understanding and communication will be essential to try regaining greater predictability in trade and investment amid this turbulent period. Without efforts to rebuild trust in transatlantic economic partnerships, the cost of derisking may be substantial, leading to significant economic losses for both sides.

*John Kay is the Head of Programmes and Strategic Partnerships at the CELIS Institute, where he leads initiatives to foster informed dialogue on economic security policy and foreign investment regulation. The opinions expressed in this article are his own and do not represent the views of the CELIS Institute.