The latest episode of The President’s Inbox is live! This week, Jim sat down with Matthias Matthijs and Sophie Meunier. Matthias is senior fellow for Europe at the Council, and Sophie is senior research scholar in the School of Public and International Affairs at Princeton University. They discussed Europe’s geoeconomic transformation.

Here are three highlights from the conversation:

1.) The European Union is increasingly using its economic clout to achieve geopolitical ends. Matthias noted that for decades the EU’s economic approach combined neoliberalism (which emphasizes free markets) and ordoliberalism (which emphasizes price stability and small fiscal deficits). The idea was to establish rules that created a level playing and delinked economic policy from foreign policy. But in recent years the EU has been buffered by numerous crises—including Brexit and COVID—and has moved away from some of its founding values and leaned into geopolitical competition. As Matthias put it, “this is not your uncle’s European Union; let alone your grandmother’s.”

2.) China and the United States have helped spur Europe’s embrace of geoeconomics. Sophie pointed to 2017 as a pivotal year. China was pursuing more aggressive authoritarian capitalism, and the Trump administration was turning against multilateralism. The result, Sophie noted, is that “the people in the [European] Commission who deal with trade and investment realized that they could no longer be naïve, vis-a-vis the rest of the world and especially China and the United States.” So the EU adopted tools like foreign investment screening, anti-subsidy regulations, and anti-coercion legislation to enable it to tilt economic trends back in its favor.

3.) The 2024 U.S. presidential election will be consequential for whether the EU further embraces geoeconomics. Matthias argued that if Biden wins the EU’s geoeconomic impulse may slow and the United States and Europe might find ways to cooperate. However, should Donald Trump, or a candidate who shares his views, win, the EU is likely to move even further away from its traditional preference to decouple economics from politics. And Americans might not like the resulting policies. As Matthias put it, “if the Trump administration were to go on a full on trade war with the EU the way they did in 2018 with China, the EU could make it very clear that this would hurt the United States even more if they were to do so.”

If you’re looking to read more about Europe’s geoeconomic revolution, Matthias and Sophie laid out their argument in a recent article for Foreign Affairs.