Ricardo Santos || “His negotiating strategy allows him to clear the board and redraw the boundaries in ways previously unthinkable. And he does not seek to break with Europe but to rebalance the relationship”
Ricardo Santos Rodríguez (CFA, Patrivalor, member of the Asset Managers Committee of CFA Society Spain) •
History never repeats itself, but it often rhymes. As we have seen on several occasions, Trump's negotiating style is characterised by unpredictable, aggressive tactics focused on “leverage,” as he himself describes in “The Art of the Deal”; it is about thinking big and using uncertainty to achieve results and/or accelerate processes. The negotiations of extremes and the uncertainty of the elephant entering the china shop allow for clearing the board and redrawing the boundaries in ways previously unthinkable.
The strategy of conflict as a catalyst for rebalancing the Alliance. Certainly, the current situation shares echoes with that of Ronald Reagan in the 1980s, when he demanded significant increases in Defence spending from Alliance countries (with an unachieved target of 3%) warning that the US could not bear the entire burden against the USSR. Trump continues with “peace through strength” as he perceives Europe not only as a beneficiary of US protection without contributing proportionally (“freeloader”), but also inconsistent and with strategic weaknesses. Just as Reagan pushed for greater autonomy, spending, and modernisation against the USSR, Trump does so against Russia and China.
For Europe, Trump’s approach (much more direct than Reagan’s) has proven to be a brutal yet effective push. We have seen rapid agreements emerge with commitments to increase Defence spending from 2% to 5% by 2035, massive purchases of US gas and weapons, cross investments, and energy diversification agreements. Thus, Trump has managed to cohesively/unequivocally define the boundaries of a Western area against Russia and China, explicitly linking law, Western values, trade, energy, and security.
In Defence, the jump from 2% to 5% of GDP (with 3.5% in armaments and equipment) allows Europe to modernise its armies and boost local industries (from military vehicles to cyber defence), increasing capacity against Russia or any future threat. In Trade and Energy, the pressure from tariffs (initially 30% and negotiated down to 15%) has forced Europe to break vulnerabilities: reducing dependence on China in supply chains and seeking more stable and reliable energy suppliers. Recent agreements are tough, but they include market shares, cross investments, and other rules of the game that will ultimately benefit both the US and Europe.
Reaganomics 2.0. Upon taking office, Reagan had to face a scenario of stagflation (high inflation and economic stagnation). His recipe was “Reaganomics”: tax cuts, aggressive deregulation, increased Defence spending, and reducing the State (“Government is not the solution, it is the problem”), while sustaining a space race against the USSR that ended up transforming the economy with massive advances (computers, GPS, materials, etc.). He achieved sustained (average) growth of +3% per year, a drop in inflation (from 13% to 4%), and a significant increase in employment. Trump has begun his term with high inflation and low growth and has expediently implemented a faster and broader agenda than Reagan's: tax cuts, deregulation, reduction of bureaucracy (DOGE), and a greater emphasis on “America First” both industrially and energetically (“drill, baby, drill” and nuclear), while maintaining the AI race against China; it is a race different from the space one, intangible and without a defined goal, but much broader, faster, and with greater strategic implications for the future.
A potentially more transformative outcome. The US and Europe have been allies and friends for decades. Trump does not seek to destroy that relationship but to rebalance it so that it is sustainable, forcing Europe to awaken from its stupor. The initial tension will transform into strategic gain. Europe must stop victimising itself, break free from its chronic paralysis, and seize the moment to develop strategic autonomy. Indeed, history rhymes: Reagan demonstrated that well-channelled US pressure could generate stronger allies with greater prosperity. With Trump, the message is similar, but the volume is much higher and the potential outcome more transformative.♦
