As U.S. President Donald Trump doubles down on plans to ink a deal with Russian President Vladimir Putin over Ukraine, the risk of a U.S. U-turn on Russia sanctions appears high. Such a scenario would leave it up to Europe to continue with the sanctions on its own—an unprecedented situation that would beg the question of whether unilateral European measures would have much bite on Moscow. The answer is yes, especially if European sanctions focus on trade.

The power of Western sanctions lies in the ability of Washington and Europe to leverage the prominence of the U.S. dollar, as well as the dominance of the trans-Atlantic economy in trade, investment, and technology. In the case of Russia, simple numbers show that Europe has more leverage than the United States. Since early 2022, Russia has ditched the U.S. dollar in a bid to shield itself from sanctions, with the effect that Russian firms now use the greenback for less than 5 percent of cross-border trade. What’s more, Russia’s trade ties to the United States have always been minimal; in 2021, the last full year before the full-blown invasion of Ukraine, the United States absorbed a mere 3.6 percent of Russia’s exports and supplied just 5.9 percent of its imports.

By contrast, the European Union used to be Moscow’s top trading partner, supplying nearly 40 percent of Russia’s imports and absorbing about the same share of its exports. These numbers highlight the EU’s leverage over Russia in the form of trade sanctions. Take Russia’s imports first. EU sanctions cover 54 percent of Russian imports from the bloc (based on 2021 data), creating headaches for the many Russian firms that rely on EU-made high-tech goods. By the end of 2024, for example, the Russian airline S7 had grounded 31 of its 39 Airbus A320neos for lack of access to spare parts. Without maintenance, S7 Airlines will have no choice but to decommission these planes in 2026.

Europe’s trade leverage over Russia is perhaps even greater when it comes to Moscow’s exports, mostly hydrocarbons. In this field, the Kremlin shot itself in the foot by curbing gas shipments to the bloc in 2022. (Despite the Kremlin’s claims to the contrary, the EU’s energy crisis at the time was not due to any sanctions but to the Kremlin’s own decision to cut off gas supplies). Since then, Europeans have been hard at work to diversify their energy suppliers, build infrastructure to import liquefied natural gas, and accelerate the expansion of renewable energy. There is no reason why they should not be able to continue these efforts, which will culminate in an EU ban on all Russian hydrocarbon imports starting in 2027.

Trump may not be keen to encourage a reset in EU-Russia energy ties in the form of a revival of Russian gas deliveries. The reason for this is simple: Washington and Moscow are competitors when it comes to supplying gas to the EU. Over the past three years, the United States has become the EU’s main supplier of LNG, accounting for almost half of the bloc’s imports. If Russia were to restart pipeline gas exports to Europe, demand for U.S. LNG would fall. Russian energy firms also compete directly with U.S. ones in LNG; Russia is now the EU’s second-largest supplier of LNG, and there is little doubt Moscow is eyeing the top place.

Europe’s energy leverage over Russia also extends to oil shipments. The G-7 and EU instituted a price cap of $60 per barrel on Russia’s oil exports that are shipped with the help of insurance firms or shipping lines based in the EU or other G-7 members. A potential U.S. exit from the price cap would be manageable for the rest of the group, particularly the EU. Tankers shipping Russian oil now dodge destinations in the G-7 and EU, but they often still come from Russian ports in the Baltic. This means that they need to transit through EU-controlled maritime chokepoints, giving the bloc leverage to enforce the price cap—for instance, by requiring that all ships transiting through EU straits have proof of proper (read: Western) insurance, something that Russian ships would be hard-pressed to do.

Greater European enforcement of the price cap would have at least two welcome side effects. First, it would require a serious strengthening of Europe’s ability to detect, track and target Russia’s oil tankers, part of the so-called shadow fleet used by countries to skirt sanctions. Currently, EU governments often rely on U.S. capabilities, including teams of targeters at the U.S. Treasury. A step toward more autonomy from Washington in this area may not be a bad thing. Second, Britain is a major player in both maritime insurance and intelligence gathering. A U.S. exit from the oil price cap may help restart post-Brexit collaboration between Britain and the EU on sanctions.

Moscow’s preparations for a return of Western firms represent a final area of EU leverage over the Kremlin. Data from the Kyiv School of Economics makes it clear that U.S. firms have long been minor players in the Russian market; in early 2022, only 18 percent of the 1,307 Western firms doing business in Russia were U.S.-based. By contrast, two-thirds of them called the EU home. As Moscow takes steps for a potential lifting of U.S. sanctions—and the return of Western firms—Russian leaders probably know that the real deal is about luring European businesses back, not American ones that were barely there in the first place.

To restart Russian operations, Western firms would need access to financial channels, which is another area of EU leverage. U.S. banks were never big players in Russia, and experience from Iran sanctions suggests that it would take a lot of convincing to get U.S. financiers to restart business in Russia; in the Iran case, U.S. banks feared a snapback of sanctions even after Iran gained sanctions relief. The few major Western banks that could facilitate a return of Western businesses to Russia are of EU origin, such as Austria’s Raiffeisen, which still has massive operations in Russia. If the EU wanted to tighten the sanctions screws, it could restrict the ability of EU banks to do business in Russia.

Finally, what about the Russian Central Bank’s frozen assets? On paper, the EU is the big player here. Most of these reserves are held in Belgium’s Euroclear and more than 60 percent of them appear to be denominated in euros—a conservative estimate based on scarce available data. What’s more, the European Commission administers the $50 billion loan that G-7 states granted to Ukraine by using the interest proceeds from Russia’s frozen assets. Yet there is a catch: Moscow appears to have written down these reserves in anticipation of not getting them back. This does not mean that Moscow does not care about them. But they are probably not a priority for the Kremlin, meaning the EU cannot use them as leverage.

If Europe manages to remain united—a big caveat, to be sure—it has huge sanctions leverage over Moscow in the form of trade ties and private-sector presence—two trump cards that Washington cannot play. This does not mean that U.S. sanctions, in particular measures restricting Moscow’s ability to place external debt in U.S. financial markets and access U.S. energy technology to maintain oil and gas production, do not bite. Yet for the Kremlin, the lifting of only U.S. sanctions is unlikely to be enough.

This means that Trump cannot give Putin everything he wants in the Ukraine negotiations, at least not on the sanctions front. The EU may well be the real player here, giving Trump at least one solid reason to include the bloc in negotiations over a potential end to the Russia-Ukraine war.

Enthusiasm for a new generation of nuclear technology has gripped politicians across the world. The United Kingdom is the latest country to take action, with the Labour Party government set to revise planning rules in February 2025 with a goal of restoring the country’s position as “one of the world leaders on nuclear.” Key to this plan is accelerating the deployment of a new generation of miniature nuclear and small modular reactors (SMRs)—compact units that generate less power than traditional nuclear reactors but can be assembled onsite.

Similarly, in Australia, as part of the Australian campaign for a federal election expected in late April, the Coalition Party led by Peter Dutton unveiled a plan in December 2024 to adopt nuclear energy as a solution for providing efficient and affordable electricity. The proposal—which has drawn significant opposition from the public, as it would overturn a decades-old bans on nuclear reactors—is to build conventional nuclear stations and SMRs, with a goal of having them running by the late 2030s. The plan includes the announcement of seven proposed reactor locations across the country.

The appeal of SMRs is manifold. The first is that they can be sited on locations that are not suitable for larger nuclear power plants. Prefabricated units of SMRs can be manufactured and then shipped and installed on site. Their flexible design allows them to use various coolants—such as light water, liquid metal, or molten salt—depending on the specific technology. And in addition to contributing to the decarbonization of a country’s energy mix, SMRs can play a role in ensuring grid stability in systems with a growing share of renewables as well as rising electricity demand.

SMRs also offer significant climate benefits, particularly in providing low-carbon baseload electricity. Nuclear power, including SMRs, has a minimal carbon footprint, as highlighted in a 2022 report by the United Nations Economic Commission for Europe. In contrast, coal-fired power plants emit substantially higher levels of carbon dioxide. This stark difference highlights the potential of SMRs to reduce greenhouse gas emissions significantly when replacing fossil fuels in electricity generation.

Importantly, SMRs and renewables are not mutually exclusive; rather, they can complement each other in an integrated energy system. They are potentially suited to replace fossil fuel plants—including those powered not only by coal but also gas—and can be integrated into energy hubs alongside other renewable energy sources and green hydrogen production, creating a more resilient and balanced energy ecosystem.

Additionally, the U.K. government expects to create thousands of highly skilled jobs and drive economic growth through their development. The country’s strategy aims to position national champion Rolls-Royce as a key player in the international market, alongside other major companies such as the U.S.-based Holtec and GE Hitachi as well as the Canadian-owned Westinghouse.

There are high expectations for SMRs, but there is also a major challenge: They have been touted to require lower capital costs and shorter construction times than the traditional large-scale nuclear reactors. However, in reality, SMRs are facing similar pitfalls as large-scale nuclear power, and the disappointing results from the first pilot project in the United States should serve as a cautionary tale for governments and developers.

A project that planned to build an SMR in Idaho to serve energy to a consortium of small public utility districts in Utah was shut down in November 2023. The NuScale project, developed by an Oregon-based company born at Oregon State University, experienced significant financial challenges and cost surges: Initial estimates in 2015 anticipated a bill of $3 billion for 12 reactors, which then rose to an estimate of $9.3 billion in 2023 for a reduced capacity, at which point the project became untenable.

The Australian Coalition’s plan claims that its nuclear power development proposal will bring a 44 percent reduction in electricity costs, but those calculations have been questioned by energy experts. In its economic analysis report for 2024-25, CSIRO—Australia’s national science agency—indicated that nuclear SMRs are the highest cost category of all of the energy types assessed. Estimates put their levelized cost of energy at twice as much as for renewables.

Energy experts from the Australian Energy Council have also criticized the Australian Coalition’s timeline for nuclear development as unrealistic. They argue that it is highly improbable for Australia, which does not have any nuclear workforce or regulatory framework, to complete all the necessary steps—such as conducting geological and environmental assessments, then commissioning and constructing a reactor—before the early 2040s.

Governments in Europe are also grappling with the issue of costs: The European Commission launched the “European SMR Pre-Partnership” in 2023 in order to assess the enabling conditions and constraints, particularly financial ones, involved with constructing and operating SMRs in Europe over the next decade and beyond. In early November 2023, the Commission announced plans to establish an industrial alliance for SMRs, strengthening efforts to advance nuclear innovation and reduce the costs of deployment across Europe.

Still, countries such as Sweden and Italy are struggling to navigate their plans for reviving nuclear development. In Italy, Prime Minister Giorgia Meloni’s government is pushing for a nuclear revival despite the country having decommissioned its reactors following a 1987 referendum in the wake of the Chernobyl disaster. The Meloni government has announced plans to build new reactors as part of its energy strategy. To support this effort, the public-private National Platform for Sustainable Nuclear Power was established in Rome in September 2023, tasked with coordinating and advancing next-generation nuclear technologies. However, the initiative has shown little tangible progress so far.

In Sweden, the center-right government elected in 2022 has plans to build more nuclear infrastructure after a period of retiring old plants. From 2014-2022, a center-left government had overseen the shutdown of several reactors. The state-owned utility Vattenfall permanently shut two reactors, in 2019 and 2020, earlier than planned, saying it was not economic to keep them operating.

Although some Swedish politicians have called for restart of the units, Vattenfall management has said that a restart is not financially or technically feasible. Despite this, in June 2023, the Swedish government replaced its energy target of 100 percent “renewable” electricity by 2040 with 100 percent “fossil-free” electricity, allowing proponents to push forward with plans for new nuclear plants.

In November 2023 the government announced plans to construct two large-scale reactors by 2035 and the equivalent of 10 new reactors, including small modular reactors, by 2045. However, once again there are issues with the financing and the cost for the Swedish taxpayer.

From an economic standpoint, detailed technical analyses clearly show that not only is nuclear power is the most expensive option, but also that cost estimates for nuclear and renewable energy technologies have been trending in opposite directions: Nuclear is going up in expense, whereas solar energy and batteries are becoming cheaper.

In the case of Germany, the Fraunhofer-Gesellschaft, one of the country’s leading organizations in applied research and innovation in key future technologies, analyzed the levelized cost of electricity (including investment, operation, and maintenance) for different energy technologies. The cost comparison showed that nuclear would be by far the most expensive of all available options.

And Christian Democratic Union leader Friedrich Merz, likely Germany’s next chancellor, has already withdrawn his earlier proposal to rebuild the decommissioned nuclear stations from the Angela Merkel era, citing both economic and technical infeasibility.

It is fair to say that nuclear has become a cuckoo in the climate policy nest: a potentially disruptive presence during the energy transition. Nuclear power has entered climate policy discussions in various countries in a way that threatens to dominate, divert, or disrupt the focus on other short-term solutions, such as fast deployment renewable energy technologies.

A 2024 study by the Institute for Energy Economics and Financial Analysis found not only that SMRs are still “too expensive” and “too slow” to build, but also that investments in SMRs risk taking resources away from the carbon-free and lower-cost renewable technologies that are available today. The researchers concluded that this could delay the transition from fossil fuels forward significantly in the coming 10 years.

Recent data released by the International Energy Agency’s World Energy Outlook confirmed that renewable energy sources are going to remain the main drivers of the green transition despite the prognosed surge in nuclear energy production; the EU’s nuclear power production dropped from 2010 to 2023, leading the technology’s share in electricity production to fall from 29 percent to 23 percent.

The long construction times of 10-15 years, substantial public financing required, and frequent delays further underscore that this technology cannot serve as a timely climate solution, especially when the U.N. Intergovernmental Panel on Climate Change emphasizes that global decarbonization must accelerate steeply within the five years (carbon dioxide emissions should decline by about 45 percent from 2010 levels by 2030) and continue over the next decades to reach net zero by 2050.

Addressing climate change and achieving decarbonization require the rapid deployment of affordable renewable energy sources, with new nuclear construction potentially playing a complementary role, but not serving as a replacement or substitute for renewables.

Oversimplifications in political narratives risk misleading the public about the true costs and technical feasibility of energy options while unnecessarily framing nuclear and renewables as opposing solutions. To develop effective energy policies, the public must be well-informed about the true costs, construction timelines, and projected future energy expenses, as well as the specific energy needs and constraints of their countries.

The U.S. auto manufacturing industry is facing a crisis. A flood of high-quality, affordable Chinese cars is sweeping the globe. The Japanese auto industry has seen its market share plummet across Southeast Asia in just a few months, likely serving as the death knell for an already struggling Nissan. German auto manufacturers such as Volkswagen have also seen declining profit margins and declining sales in China, increasingly pressuring them out of consumer mass markets both for internal combustion engine and electric vehicles (EVs).

The market situation is not much better for U.S. auto manufacturers. General Motors is writing off billions of dollars of investments in the Chinese market, as the company is fundamentally unable to compete with its Chinese counterparts. Meanwhile, Chinese EV giant BYD surpassed Ford’s global sales late last year, signaling a dramatic shift in global market leadership. In a September interview with the Wall Street Journal, Ford CEO Jim Farley called China’s automakers an “existential threat.”

Without active policy engagement from the U.S. government, the country’s auto industry is at risk of becoming globally uncompetitive as well as falling behind on crucial manufacturing capabilities and drivetrain propulsion technologies.

A globally competitive U.S. auto industry is critical for national economic security in several different ways. The first, of course, is that the auto industry is a major employer, supporting nearly a million American workers. But auto manufacturing is also important as a techno-industrial base. The industry serves as a reservoir of industrial capacity—during World War II, for example, Ford factories built the B-24 bombers, jeeps, and Sherman tanks that carried the Allied armies from Normandy, France, to Berlin. A robust auto manufacturing base is key to the idea, recently voiced by Army Gen. Christopher Cavoli, that “industrial capacity is deterrence.”

A technologically obsolescent auto manufacturing industry also jeopardizes broader industrial capability. China’s rise is fueled not only by cheaper labor and government subsidies, but also by innovation that has produced technological leads. China is already the world leader in deploying robotics for manufacturing, which contributes to the country’s manufacturing advantage and industrial capacity. A weakened auto industry would further jeopardize the United States’ efforts to catch up on robotics and other key indicators of advanced manufacturing.

In many ways, automobiles are integrated platforms of the most advanced technologies that society has to offer. Auto manufacturing is not just a matter of metal-shaping and propulsion technologies—now, it even includes the development of artificial intelligence systems. For instance, BYD recently announced that it will make its advanced driver-assistance system free on many of its cars, surpassing the customer offerings for autonomy of almost every other automobile maker.

Despite the United States’s tremendous lead in building frontier AI models, China is still a leader in deploying commercial AI systems, particularly in surveillance applications and now in self-driving technology as well. The race for global auto dominance is about more than just the cars—it also includes competition for technological leadership in software and AI.

But this is not the first time that the U.S. auto manufacturing sector has faced stiff competition from new international competitors. During the 1970s and 1980s, companies within the ascendant Japanese auto manufacturing industry challenged Detroit with their affordable mass-market small cars during a similar time of energy crisis. The administration of then-U.S. President Ronald Reagan demonstrated how targeted policy intervention could reshape competitive dynamics through bilateral negotiations and import quotas.

These policy measures helped support the onshoring of domestic auto manufacturing and the creation of multiple joint ventures between U.S. and Japanese auto manufacturers, including Toyota and General Motors as well as Chrysler and Mitsubishi. It also allowed for the diffusion of Japanese management practices such as kaizen—the philosophy of promoting a culture of continuous improvement—that U.S. auto manufacturers also adopted to streamline their operations.

Some of the same factories kept open by these joint ventures are now Tesla and Rivian manufacturing plants, demonstrating how maintaining the overall success of the U.S. auto manufacturing base can serve as an infrastructure base to build the next generation of firms.

China adopted very similar strategies to create its own massively successful auto manufacturing sector. Starting in the mid-1980s, China famously only allowed U.S. auto manufacturers into the country through joint ventures with domestic auto companies and placed foreign equity caps on those ventures. The Chinese companies have subsequently had decades to benefit from U.S. engineering and know-how as well as positive spillovers from foreign direct investment.

Beijing also placed tariffs on car imports and excluded imported cars from generous consumer subsidies. As a result, China spent decades incubating a nascent auto manufacturing industry in part by stifling foreign competition and stealing technology from Western auto manufacturers.

The United States now has an opportunity to use Reagan’s playbook to save domestic auto manufacturing and take back what China stole from the U.S. auto manufacturing industry. President Donald Trump suggested on the campaign trail in March 2024 that if Chinese auto manufacturers are willing to build factories in the United States and staff them with American workers, then they should be allowed to sell their cars there.

But the Trump administration should go even further—if Chinese companies want to sell cars in the United States, then they should not only have to manufacture them in the country, but also be required to do so through joint ventures with U.S. companies. These joint ventures could also be structured to ensure compliance with regulations regarding foreign entities of concern.

This approach should certainly be combined with restrictions on Chinese-made imports, including through tariffs. However, tariffs alone would not be sufficient. While they may provide U.S. auto manufacturers a temporary respite in the U.S. market, tariffs do not promote global competitiveness for those manufacturers. To do that will require capital and technology.

As a result, it is important for U.S. auto manufacturers to continue to be exposed to competitive technologies and techniques to prevent stagnation or complacency. Forcing domestic joint ventures essentially subsidizes investment and U.S. jobs without requiring government subsidies, all while ensuring that U.S. auto manufacturers are able to compete in a global marketplace.

Indeed, the demand for access to the U.S. market through joint ventures could even attract Big Tech contenders to step into the automobile space—as Apple has tried to do in the past—if they had favorable access to foreign technology.

Trump prides himself on being a dealmaker—and this proposal demands precisely the kind of unconventional alliance-building at which he claims to excel. By bringing U.S. and Chinese auto manufacturers to the negotiating table, Trump has a historic opportunity to secure a deal that bolsters the United States’ manufacturing jobs and investment.

The U.S. auto industry stands at a crossroads: The coming years will reveal whether Chinese manufacturers will dominate developing markets, rendering stalwarts such as Ford and General Motors obsolete, or whether the United States’ techno-industrial base will once again realize its tradition of leapfrog innovation.

Should Trump successfully deliver on his campaign promise to bring the country foreign investment and jobs, then reclaiming U.S. automobile leadership could become a defining achievement of his presidency.