Lithuania and Trump 2.0 - The Economic Dimension

Lithuania passed the test posed by the first Trump administration with flying colors. At a time when most European allies were rattled by the president’s brusque style and criticisms of European free-riding, Lithuania more than doubled its defense spending between President Trump’s election in 2016 and his departure from office in 2021.

Since 2019, Lithuania has welcomed a rotation of US heavy battalions, providing additional deterrence against the Russian threat. The country has also punched above its weight in regional connectivity projects, oftentimes involving US investment. Lithuania’s embrace of Taiwan, at the cost of an angry response from Beijing, bought the government plenty of goodwill in Washington at a time when US foreign policy started to be defined by America’s geopolitical competition with China.

As the first year of President Trump’s second term draws to a close, the challenge for Vilnius is that the recipes of the first Trump administration do not necessarily apply. The US government is populated by vastly different cadres from what was, in President Trump’s first term, a largely conventional Republican administration. The administration has also become far more personalistic, eschewing the traditional processes that once brought information to the top and ensured that decisions were being implemented. For example, the National Security Council, the main locus of policymaking in most administrations, appears largely moribund in the second Trump Administration. Trump and a narrow - and often rotating - group of advisors and personal friends make most decisions. For America’s partners, that makes US policymaking less predictable. It also makes policy follow-through less likely, since the preferences of large agencies are often ignored in favor of the personal preferences of Trump and the circle around him.    

If the first Trump administration was marked by a shift from post-Cold War foreign policy priorities to the China challenge, the second appears to be dominated by a retrenchment into the Western hemisphere, leaving Indo-Pacific allies in suspense about US commitment just as much as the European ones. Whether Washington gives Vilnius extra credit again for being one of the more hawkish European voices on China is, at a minimum, a testable proposition.

Likewise, even though NATO continues to play an important role in the security of Eastern Europe, the United States is on a trajectory toward reducing its own troop numbers and related financial commitments in the European theater – as exemplified by the recently announced partial withdrawal of US troops from Romania and the discontinuation of the (trivially inexpensive!) Baltic Security Initiative, though the latter might still be brought to life by Congress.

The new conventional wisdom is that President Trump is a “transactional” president and that allies such as Lithuania should therefore be looking for ways to engage the administration through business and investment deals. United States would like you not only to increase defense spending but also to buy US weapons systems, alongside American LNG. If you can throw in investment in the United States, or opportunities for US companies to make money in your country, the doors in Washington will open.

While not necessarily wrong as a description of the reality of the current administration, that piece of advice is also dramatically incomplete. By all means, Lithuania should not shy away from promising commercial relations with the United States – which may also provide answers to the country’s security- and energy-related needs. But it would be a mistake to think that such links guarantee staying in President Trump’s good graces – and also that such relations are always free of risk.

For one, Lithuania is and will remain a relatively small economy. Whatever “transactional” heft it can bring to bear to pursue its own interests in Washington, it will always face the risk of being outbid by other, bigger actors – unless, of course, it acts as part of broader European coalitions. Even then, the reliability of the current administration is often unclear. Ukraine’s ‘minerals deal’ did not bring about a marked shift in the administration’s policies toward Russia and Ukraine, despite giving the United States a direct, material stake in Ukraine’s future.

Secondly, economic interdependence can be weaponized. Lithuania experienced the consequences of Chinese economic coercion firsthand, just as much of Europe saw how Russia used energy as an instrument of extortion. If current political trends in the United States continue and if the strategic gap between Washington and European capitals continues to widen, it is perfectly imaginable that this or some future US administration will similarly seek to use Europe’s dependence on the United States to its own advantage – by giving an upper leg to (e.g.) Trump-friendly political candidates on social media, or by threatening to withhold LNG supplies or spare parts for European F-35s, bought at great expense by governments seeking to ingratiate themselves with the US administration.

Even under relatively benign circumstances, it is not farfetched to envisage a scenario in which the United States becomes embroiled in a conflict that Europe is not part of (or vice versa), affecting the willingness and ability of the US defense industry to support the European industry.

What is now commonplace in the context of European relations with other powers, namely that Europe’s linkages with the rest of the world must be derisked, is also true of Europe’s – and Lithuania’s – relations with the United States. That does not mean decoupling, nor does it mean wishing for a transatlantic divorce. Rather, it means placing the relationship on a stronger footing by grounding expectations about America in current reality, rather in an idealized memory of the past. For Lithuanians, as a result, the most reliable path toward a stronger and enduring relationship with Washington goes through building deeper security, energy, and economic partnerships with likeminded European allies and neighbors, who can help amplify Vilnius’ voice in Washington and beyond.