The prevailing narrative casts the United States as the superpower and Europe as the supplicant. That framing, however, conflates power with leverage. Power refers to absolute capabilities; leverage describes the ability to impose higher costs on a counterpart than one incurs oneself. By that metric, Europe is stronger than it often appears.
With a market worth roughly $10 trillion, Europe wields a central strategic lever. Together, Europe and the US constitute the world’s two largest consumer markets. Major US technology companies remain dependent on European demand for growth. If the seven largest US tech firms each generate about 23% of their revenues in Europe – comparable to Meta – the European market would account for more than $500 billion annually. Losing this access would not only weaken balance sheets but also undermine the growth narrative of the so-called “Magnificent Seven.” The sharp US reactions to European digital regulation underscore that dependence.
Europe also holds product-specific leverage in critical supply chains, notably in low-enriched uranium and gas turbines. Roughly 80% of the low-enriched uranium needed for the planned expansion of US nuclear capacity is sourced from Europe – a structural bottleneck that cannot be resolved quickly. At the same time, Siemens Energy dominates the 40–60 megawatt gas turbine segment, equipment increasingly indispensable for AI data centers. Delays in these components could cost US hyperscalers tens of billions of dollars and set back key infrastructure projects.
Even the US Treasury market – often viewed as a pillar of American strength – presents Europe with significant financial leverage. The investor base for Treasuries has shifted. Foreign central banks are no longer consistent stabilizing buyers, while leveraged hedge funds play a growing role and can withdraw rapidly in periods of stress. The Federal Reserve has already had to intervene forcefully during such episodes. In spring 2025, yields on 30-year bonds briefly climbed above 5%, prompting US President Donald Trump to announce a 90-day tariff pause. Europe, and particularly London as a global trading hub, occupies a pivotal position in Treasury trading. Stricter European margin or clearing requirements could dampen demand and move yields; an increase of just 20 basis points would raise Washington’s annual financing costs by roughly $60 billion.
Europe’s core challenge is not a lack of leverage but difficulty deploying it coherently as a union of sovereign states. Three measures are central:
Make the Anti-Coercion Instrument (ACI) credibly deployable: The ACI grants the European Commission authority to adopt countermeasures. Yet as long as activation appears politically unlikely, its deterrent value remains limited. Clear compensation mechanisms for affected member states would enhance credibility.
Strengthen prioritization rights for strategic goods: The European Union should be able to prioritize European buyers for critical products such as turbines, analogous to the US Defense Production Act.
Integrate geopolitical risk into financial market oversight: Given the evolving investor base for US Treasuries and heightened policy volatility in Washington, European regulators and investors should explicitly factor geopolitical risk into their assessments. London’s role as a trading center represents regulatory leverage that should be understood strategically.
None of these steps would fundamentally rebalance global power. But in a fragile financial environment – where Trump is obsessively watching yields and a 20-basis-point shift can translate into $60 billion in additional annual US borrowing costs – marginal adjustments can have outsized effects.
Philippa Sigl-Glöckner is an economist and founding director of the think tank Dezernat Zukunft – Institute for Macrofinance.
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