The Finder | Our monthly Insights | Issue 17 – May, 2025

Evolving but not revolving: Persistent (geo)political uncertainties in Europe and beyond

May has been a busy month. While no significant resolutions or major changes have yet been made, both in the European Union and globally, it has been an eventful month. Also, the impacts of Donald Trump’s first 100 days in office have become more apparent, in a manner similar to the new dynamics and trends that are characterising current European and international affairs.

Trade-related issues have been unarguably a major source of uncertainty globally, especially after ‘Liberation Day’ tariffs came into effect. However, on the 12th of May, the United States and China moved to ease tensions in their ongoing trade war by agreeing to temporarily lower the heavy tariffs they had placed on each other, with Washington reducing its rate on Chinese imports from 145% to 30% and Beijing lowering its rate on US imports from 125% to 10%, for a 90-day period. 

This development, along with last Sunday’s EU-US joint decision to suspend tariffs until July, signals a shift toward diplomacy, with some commentators even reckoning that “the worst of Trump trade war is behind it”. As far as the EU-US trade is concerned, EU’s Commissioner for Trade and Economic Security Maroš Šefčovič said the bloc is committed to finalise a trade deal that “works for both”, based on “respect, not threats” also in consideration that the EU is America’s largest trade partner.  

The swiftness with which these two “trade truces” have come about may be explained by the awareness of the current US administration that its stances could have been stymied by financial markets, which signalled the potential unintended consequences of such initiatives, and by the US society at large. Indeed, on the 28th of May, the Court of International Trade ruled that the emergency law invoked by the White House did not confer exclusive authority upon the president to impose tariffs on nearly all countries globally. The court reportedly highlighted that the US Constitution vests trade regulation powers in the Congress, not the president, and that emergency powers cannot supersede congressional authority over commerce. 

Notwithstanding this recent development, several trade experts argue that, fundamentally, the global trade conflict remains unresolved. Although the ruling represents a setback for the Trump administration, it is unlikely to either dissuade the president from pursuing reforms aimed at reshaping global trade regulations to benefit the United States, or to cause him to refrain from using tariffs as a primary instrument for achieving his policy objectives. 

By contrast, a recent survey of the EU Chamber of Commerce in Beijing has voiced the concerns of European companies about China slowdown rather than US tariffs. The extent of pessimism mirrored the findings of an annual survey of US firms operating in China, published in late January, which revealed that a record number of American companies were expediting efforts to shift their manufacturing or supply chains elsewhere. It is interesting to note European Commissioner Maroš Šefčovič’s visit to China in such a circumstance.

In a related yet distinct context, the 17th of May Istanbul negotiations on Ukraine can be regarded as the most recent realistic diplomatic endeavour aimed at de-escalating tensions. Although no major breakthroughs were achieved, apart from a substantial exchange of prisoners, the negotiations, at least, helped maintain open communication channels between the conflicting parties. EU countries played a supportive but secondary role, backing Turkey’s mediation whilst continuing to apply sanctions on Russia and provide aid to Ukraine. 

After this first round of negotiations, the Russian Federation has proposed the convening of a second round of talks with Ukraine. This prospective development would take place in Istanbul, with a proposed timeframe of next Monday for the meeting to be held. Foreign Minister Sergey Lavrov has stated that the Russian government has submitted its “specific proposals” for the upcoming talks to Washington, but has not yet disclosed Russia’s “peace memorandum” to Kyiv.  

The war in Ukraine has notably also triggered the debate on the future of the European Union’s defence. As a result of a contentious discussion among EU member states, the General Affairs Council’s endorsement completed the last stage of the approval process for the €150 billion joint loan initiative known as the Security Action for Europe (SAFE). The Commission first proposed the SAFE programme in March as the funding component of their wider strategy to strengthen the European defence sector and increase the production of military equipment and ammunition. In April, the European Commission invoked an emergency clause to bypass the Parliament and send the final SAFE agreement directly to the Council for negotiation, where Hungary chose to abstain. 

On a similar note, French President Emmanuel Macron announced that France and Germany have agreed to establish a joint defence and security council, which will convene regularly to address shared strategic challenges. On the same occasion, Chancellor Merz urged all European Union countries to boost their defence budgets, stating that this is the only effective means to tackle shared weaknesses and aid Ukraine. It is also worth noticing that Germany has abandoned its long-standing resistance to nuclear energy, marking a second clear indication of improved relations with France under the new government. 

This last development settled a significant disagreement between Germany and France, especially during the crisis triggered by Russia’s full-scale invasion of Ukraine. However, an improvement in Franco-German relations, along with Polish-German relations, was already quite clear to some observers from the onset of Merz’s chancellorship as “neither Ukraine nor the EU are at the negotiating table, although Trump has said Europe should be responsible for subsequent security guarantees for Ukraine”.

Within this context, the potential for Germany to assume a major leading role in the European Union has been the subject of both analysis and discussion. Indeed, the role of Germany in Europe was identified as a key priority during a press conference that took place on the day following the revelation of the results, which indicated that Friedrich Merz had led his party to a decisive victory. 

This is particularly pertinent also in relation to the escalating tensions between Europe and the United States under the leadership of President Donald Trump and his administration. “All the signals we are getting from the US indicate that interest in Europe is clearly declining, and the willingness to get involved in Europe is dwindling”, he stated. Notwithstanding Friedrich Merz’s declarations and a solid collation alignment to strengthen the EU’s security capabilities, the conservative leader won the parliament’s vote to become chancellor only at the second attempt for the first time in Germany’s contemporary history.  

Uncertainty about what the future could bring to EU politics has also emerged in the aftermath of the Super Sunday when “pro-EU forces” won in three bellwether elections in Romania, Portugal as well as in the first round of Poland’s presidential race. Nevertheless, several commentators have highlighted the strong push towards political power being made by the so-called “far-right parties” across Europe.

Last but not least, on Wednesday the 21st of May, the European Commission released its Single Market Strategy, a plan, clearly inspired by the Letta and Draghi reports, that focuses on “removing the most harmful barriers, reducing red tape, promoting investment and ensuring fair competition”. Executive Vice-President Stéphane Séjourné introduced the Commission’s much-anticipated initiative which could become a defining element of his time in office. The Vice-President also criticised the EU’s sluggish legislative process. In the absence of clear European standards in key sectors, he warned, countries like the U.S. and China are effectively shaping the rules for European consumers. “This is also a matter of sovereignty for the European Union”, he added. On the same day, the EU executive body presented its plan to amend the General Data Protection Regulation (GDPR) to simplify reporting.

The return of Donald Trump to the White House has had a considerable impact on the European Union, which has been compelled to shift its focus from trade reliance on China to the growing risks associated with exports to the US, a CEPS Publication highlights. Indeed, the European Union is currently under pressure from two major global powers, and this situation has led it to rethink its approach to economic security. This must extend beyond the realm of trade, encompassing investment ties and alterations to the global financial system. In the context of a progressively unpredictable global environment, fundamental assumptions within the European Union, such as the stability of rules, the openness of markets and the reliability of allies are being subjected to scrutiny, the author remarks.

On a very similar note, an Ifri Study on the geopolitical risk for enterprises points out that the shifting balance within the US-China-Russia strategic triangle is creating new dynamics that businesses can no longer avoid. In fact, they now face geopolitical risks, often without having been prepared for them, the study underscores. The study also notes that company leaders can no longer afford to ignore these challenges. Business leaders often rely on a mainstream view of geopolitical risk shaped by banks, consultancies, and specialist firms. This outlook, though useful, assumes that globalisation will continue despite current upheavals and tends to be overly simplistic and impersonal. However, the authors argue that, to navigate today’s complex environment, companies would benefit from a more thoughtful and context-specific approach to geopolitical risk that goes beyond description and engages more deeply with the underlying dynamics.

Whereas, on the question of Germany’s new government and Europe’s competitiveness, a Project Syndicate’s Commentary elaborates on the consideration that the wider European economy relies significantly on Germany, the bloc’s industrial engine. In turn, Germany’s economic strength depends on access to low-cost energy, the author states. With geopolitical tensions and climate challenges driving the urgent shift to renewable energy, the key challenge now is crafting an energy strategy that is both effective and politically acceptable. The EU’s new Clean Industrial Deal is also regarded as a partial but significant response to climate change and the need to boost Europe’s economic competitiveness. As highlighted in Mario Draghi’s report, according to the author, the economic and environmental objectives can support each other, as long as investment is properly directed.

On the question of the new German government within the current (geo)political environment, an ECFR Commentary noted that there are valid reasons to be cautiously optimistic about Germany’s taking a leadership role in Europe. One major factor is Friedrich Merz’s strong awareness of Germany’s underpinning political patterns, the authors highlight. He has repeatedly criticised the so-called “German vote”, where internal disagreements within the Scholz’s coalition often led to delays or inaction on EU matters and, at times, to Germany’s abstention. The new chancellor has also acknowledged that this pattern damaged trust with key European allies, especially France and Poland, notably Germany’s partners in the Weimar Triangle. In addition, he has openly warned about the potential danger a second Trump presidency could pose to Europe. Whilst simply identifying the issues does not guarantee effective leadership, it is a necessary first move, the authors reckon. 

On deepening European integration of energy markets, a CER Policy Brief explains that, in the 1950s, alongside the formation of the European Coal and Steel Community, countries such as Germany, Switzerland, France, Italy and the Low Countries began linking their electricity grids. This allowed them to trade power – particularly hydroelectric energy from the Alps – reducing the need for coal in electricity production and redirecting it to industry, the author notes. The expansion of nuclear energy and the discovery of oil and gas in the North Sea during the 1970s and 1980s further strengthened the European power network, with French and German nuclear plants and British, Dutch and Norwegian gas facilities supplying affordable energy for export. Today, the urgency of climate change and the growth of renewable energy are pushing Europe to deepen and accelerate the integration of its electricity markets, the author argues.

On fostering the EU’s ambition to accelerate and lead the digital transformation, a Clingendael Policy Brief notes that the EU Competitiveness Compasbs offers a strategic policy framework designed to help European industries tackle emerging challenges. The authors explore the geopolitics surrounding technology and digitalisation, focusing especially on the EU’s relationship with the US and China.  They break down the essential components of the “technology stack,” using an AI chatbot as an example. These components include everything from critical raw materials to knowledge and applications, as well as physical infrastructure, data and algorithms. They also examine the EU’s role in the global technology landscape and outline key measures needed to enhance the bloc’s digital competitiveness. Ultimately, these efforts aim to strengthen the EU’s economic security, its capacity to make independent decisions and maintain influence in the digital arena, the authors also highlight. 

A Finabel Publication elaborates on the 2025 White Paper on Defence, which sets out a strategic plan to enhance European security through increased financial incentives, greater integration and strategic autonomy. The author explains that it aims to address key challenges such as low investment, fragmented defence industries and deficiencies in military capabilities. To this end, the White Paper proposes the establishment of a Single Market for Defence, with the aim of streamlining procurement processes, encouraging innovation, and fostering collaboration among member states. The author also analyses the proposal’s viability, exploring what would be required to achieve full interoperability across Europe’s defence systems. Despite the financial and political challenges, he argues that establishing a Single Market for Defence could lay the groundwork for a more robust and autonomous European security framework capable of responding to emerging threats.

On the question of raw materials, a SWP Commentary states that securing a diverse supply of mineral resources is a strategic priority, one in which resource-rich nations in the Global South play a pivotal role. The commentary takes the example of Zambia, a leading exporter of copper and other critical raw materials that is actively pursuing long-term partnerships to attract investment and increase the value added to its domestic production. The EU has taken the first steps towards collaboration by establishing a strategic raw materials partnership, it clarifies. However, to remain competitive on the global stage, the EU requires a more robust industrial policy that should include a unified foreign policy on raw materials that aligns with the ‘Team Europe’ strategy, as well as targeted financial tools to strengthen industrial partnerships, it asserts.

Despite not featuring high in the news, an ECDPM Commentary tackles the question of how the EU should manage geopolitical shifts and human mobility. The author starts by acknowledging that migration has continued to be a central issue at the Foreign Affairs Ministerial Meeting held on the 21st of May in Brussels. Indeed, marking the 25th anniversary of the first Africa-EU summit, the meeting presented an opportunity to re-evaluate and strengthen their collaboration on migration, the author clarifies. To foster safe, legal and mutually advantageous migration, both sides must carefully navigate a complex environment. This involves reshaping their cooperation to prioritise labour mobility tied to green and digital transitions, as well as investing in skills development, she argued.

This editorial is authored by Massimiliano Gobbato, Communications Director. Contributions by PubAffairs Communications Team’s Nicole Finucci, Kristina Vilenica and Jacopo Bosica to the drafting of ‘The Finder’ are gratefully acknowledged. 

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