The scene was Davos, 2026. President Trump, addressing the global elite, delivered a stark assessment: Europe was facing a crisis of its own making. He argued a relentless pursuit of ambitious environmental policies, what he termed the “Green New Scam,” had strangled affordable energy and left the continent vulnerable.
His critique didn’t stop there. He painted a picture of nations burdened by unchecked migration, straining social systems and eroding cultural foundations. A suffocating web of regulations and escalating government spending, he claimed, had stifled innovation and left Europe struggling to compete with a resurgent America.
A central accusation resonated with pointed force: Europe’s reliance on American security, decades of failing to meet NATO’s defense spending commitments, had allowed them to avoid the true costs of sovereignty – costs borne by the American taxpayer. It was a challenge to the established order, delivered with characteristic directness.
But was it merely rhetoric? A cold look at the economic data emerging in early 2026 suggested a troubling alignment with the President’s claims. While the United States surged forward with aggressive growth and a loosening of regulations, Europe appeared locked in a state of unsettling stagnation.
The numbers told a compelling story. U.S. inflation, at a manageable 2.7%, was steadily approaching the 2% target. More dramatically, fourth-quarter GDP growth soared to 5.4%, a stark contrast to Europe’s meager 0.2%. For the entire year, the U.S. projected growth between 4.3% and 5%, while Europe struggled to reach 1.3% to 1.6%.
The labor markets reflected this divergence. American unemployment held steady at 4.4%, despite significant cuts to government spending and a reduction of 1.2 million people receiving food assistance. Meanwhile, the Eurozone grappled with a 6.3% unemployment rate.
Europe’s fiscal policies moved in direct opposition to the U.S. approach. Social protection spending across the EU rose by 7% in 2024, pushing the expenditure-to-GDP ratio to 27.3% – exceeding 31% in nations like France and Austria. This escalating demand placed immense pressure on already strained social safety nets.
The regulatory landscape further widened the gap. The U.S. boasted a 129-to-1 deregulation ratio, while Europe continued to add layers of complexity. New sustainability and digital reporting requirements alone were projected to cost EU firms $9.18 billion annually. The contrast was stark: five new federal mandates in the U.S. versus the full implementation of the AI Act and Corporate Sustainability Reporting Directive in the EU, impacting over 50,000 companies.
Tax policy proved to be a powerful magnet, drawing capital away from Europe and towards the United States. The “One Big Beautiful Bill Act” delivered historic tax cuts, including full expensing for capital investments. This attracted an estimated $7 trillion in foreign direct investment, with commitments potentially reaching $18 to $20 trillion. Europe, by comparison, saw inflows of only $239 billion in 2025.
The United States also achieved a remarkable level of energy independence, becoming a net exporter with an estimated $200–250 billion annual energy trade surplus. This provided strategic leverage, particularly through LNG exports to Europe. Europe, reliant on 58% imported energy, faced higher costs, greater supply risks, and diminished economic resilience.
Energy prices underscored the disparity. Electricity and natural gas were significantly cheaper in the U.S., thanks to abundant domestic production, lower taxes, and reduced import dependence – often costing half as much as in Europe, and sometimes even a third for industrial users.
Even trade dynamics shifted. Europe’s trade surplus with the United States plummeted by 50% and was projected to decline further, a consequence of shifting economic forces and policy changes. The old patterns of trade were being fundamentally altered.
Beyond economics, a renewed focus on border security in the U.S. yielded dramatic results. Under President Trump’s leadership, the border became the most secure in decades, with over 237,000 illegal crossings apprehended and no releases into the country. Nearly three million individuals departed the country, either voluntarily or through deportation.
Europe’s experience was markedly different. An additional 155,000 illegal migrants entered the continent, contributing to rising crime rates and increased social expenditures. The contrast in approaches, and their consequences, was undeniable.
