Cozen Currents: America (First) at an Inflection Point

“With the return of President Trump and his America First foreign policy, leaders around the world are coming to terms with the realization that Trump’s first term approach to geopolitics can no longer be viewed as an aberration in US policy but rather as an inflection point.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• President Donald Trump’s return to office was always likely to raise tensions with the European Union, but the emerging clashes, exacerbated by differences in negotiating styles, are creating a divide that will likely denote a meaningful inflection point in transatlantic relations.
• As President Trump has expanded the big tent of the Republican Party to encompass more working-class voters, the GOP’s approach to labor policy is evolving.
• One of President Trump’s top priorities is boosting the development of AI, and that means solving the technology’s insatiable appetite for energy.

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Trump’s Continental Divide

No Longer BFFs. President Trump’s re-election was expected to significantly increase tensions in the transatlantic alliance, and clashes over tariffs and the war in Ukraine have already emerged.

• Trump has not been shy about his tariff threats against the European Union (EU), and the bloc is expected to be a significant focus of his push for reciprocal tariffs, particularly its value-added tax. The president has often criticized the EU for what he sees as unfair treatment of US goods compared to how the US treats EU imports. Implementing these duties will take some time, but the EU has signaled it intends to respond to the measures with its own retaliatory tariffs before seeking an off-ramp.
• More recently, European officials were caught flat-footed by the Trump administration’s announcement that it intended to negotiate directly with Russia for peace with Ukraine. The decision sent European leaders scrambling to get involved in the talks. While still in the early stages, the Trump administration seems to be prioritizing ending the conflict rather than protecting Ukraine’s – and by extension, the EU’s – interests.

Three (or More) is a Crowd. One primary reason for these emerging clashes between the US under Trump and the EU is the different values placed on bilateral versus multilateral negotiations. Trump strongly prefers the former, while the EU embraces the latter.

• Process issues and foreign policy philosophies are partly the reason for the clash between the EU and the US under Trump. The EU, by design, has to make decisions as a group, a challenge that can sometimes hamstring its ability to act. Trump is much more in favor of bilateral negotiations, which he sees as quicker and more efficient than the EU’s multilateral approach.
• The emphasis on bilateralism is reflected in Trump’s plan for reciprocal tariffs, which will likely open more opportunities for deals than if the president had pursued a flat across-the-board tariff. In the EU’s case, the rates may not single out specific countries. Still, certain measures, such as raising the tariff rate on auto imports, could be more damaging to some than others, creating an incentive for bilateral negotiations to the extent they’re possible.
• This break between the US and EU seems more likely to be an inflection point than a moment at a crossroads. This is mainly because there is little question, at least from the US side of the Atlantic, about where the Trump administration is headed. Trump’s goal does not seem to be to push aggressively against the EU simply to gain leverage before reverting to the traditional alliance, but instead to forge a new, more arm’s-length relationship.

A Team of One. Alongside Trump’s emphasis on bilateralism exists his America First philosophy, which encourages a willingness to pursue unilateral changes despite their potential unintended consequences.

• Another aspect of the clash between the US and EU is the Trump administration’s willingness to pursue unilateral change. This philosophy was evident in Vice President JD Vance’s speech in Paris on how the US will approach AI regulation and is central to Trump’s America First approach. In these instances, the US under Trump will pursue what it sees as the best outcome for itself by the quickest means possible, another reason bilateralism tends to be favored.
• This willingness from the Trump administration to go it alone is not new and was a part of Trump’s foreign policy approach during his first term. Beyond AI regulation, it will likely manifest itself in the Trump administration’s approach to issues like tariffs and export controls. The effort to manage these issues unilaterally poses a risk of creating unintended consequences, which the Trump administration will then have to decide if they are acceptable or should be addressed. The answer likely depends on who is impacted and to what extent there is a political interest in protecting that business.

The Politics of Labor Policy Under Trump 2.0

A New GOP Approach to Labor. President Trump has grown the Republican Party by welcoming more working-class voters into the fold.

• While union leadership remains predominantly Democratic, Trump has made significant inroads with the rank and file. In 2024, his gains with union voters relative to 2020 helped him clinch a second term. According to exit polls, Trump lost voters in union households to former Vice President Kamala Harris by a margin of only eight percent in 2024, half the 16-point margin by which Trump lost these voters to former President Joe Biden in 2020. This improvement helped Trump win battleground states with greater traditions of union membership, such as Michigan, Pennsylvania, Wisconsin, and Nevada.
• In 2024, Trump’s outreach to union voters included a speech by Teamsters President Sean O’Brien at the Republican National Convention, a break from past precedent. The Teamsters declined to make an endorsement in the 2024 presidential race, which was seen as a blow to Harris and a feather in Trump’s cap.
• A group of populist economic conservatives, most notably embodied by Vice President Vance, are gaining a louder voice in the GOP. Others include Senators Josh Hawley (R-MO) and Markwayne Mullin (R-OK), who evolved from a near-fight with O’Brien in 2023 to a close relationship today.

An Unconventional Labor Pick. Trump’s choice of former Rep. Lori Chavez-DeRemer (R-OR) as secretary of Labor reflects the GOP’s changing relationship with unions.

• Chavez-DeRemer is one of only three House Republicans who cosponsored the Protecting the Right to Organize (PRO) Act, which would weaken state right-to-work laws, among other provisions. This places her to the left of most in her party on labor policy, although she backed away from her support of the PRO Act during her confirmation hearing to assuage concerns of some GOP senators. Nevertheless, Chavez-DeRemer’s nomination raises questions about a potentially more worker-friendly approach to regulation at the Department of Labor (DOL).
• Trump’s other labor personnel decisions take a more conservative direction, however. His choice for deputy secretary of Labor is cut from more traditional GOP cloth. Keith Sonderling previously served in the DOL under Trump and Trump appointed him to the Equal Employment Opportunity Commission. As deputy secretary, Sonderling is expected to have a key role in carrying out the day-to-day management of the DOL. Trump also recently fired a Democratic commissioner of the National Labor Relations Board, denying the agency a quorum to adjudicate unionization and labor rights cases. While Trump’s pick of Chavez-DeRemer is notable, the impact of this nomination could ultimately be limited by other Trump appointees.

Trump Looks to Bring Big Energy to AI

Power in Short Supply. Electricity demand is spiking partially on the back of AI data centers, raising fears the technology will be slowed by lack of energy supply.

• After decades of flat electricity consumption, US energy demand is now projected to jump 24 to 29 percent by 2035, nearly twice the rate estimated one year ago. A combination of new investments in AI data centers, manufacturing, and broader electrification are the primary drivers behind this projected increase, with data centers accounting for 30 percent of the expected growth, according to a Goldman Sachs report in April. One estimate suggests that data centers alone could consume nine percent of total US electricity generation by 2030 (up from four percent today).
• The top five US firms’ capex spending on centers topped $100 billion in 2023 and that number is only trending Energy, not chips, were already being floated as the primary bottleneck on the development of AI data centers prior to the DeepSeek saga. American consumers are expected to pay the highest retail power cost this year in almost three decades. Of that amount, McKinsey projects that 70 percent of this new data center demand will be just for AI. More than chips, energy is increasingly recognized as the bottleneck for AI, especially as DeepSeek raises major questions about what level of chips are required.
• Compounding the issue is the disproportionate impact of the new forecast load. Two-thirds of growth will fall on just three grids — ERCOT (Texas), PJM, and Georgia Power — the mass majority of it being driven by data centers. The problem is particularly acute for Northern Virginia, known as “Data Center Alley,” which hosts 70 percent of the world’s internet traffic and a quarter of the country’s data center energy load. The sub-grid of PJM covering this region, Dominion Energy, currently projects peak demand to approximately triple from current levels in 15 years.

Meeting the Demand. President Trump and his administration are fully committed to building whatever power is necessary to keep these centers online irrespective of environmental qualms.

• Perhaps the most important thing is what Trump won’t do — follow through on former President Biden’s rules requiring new natural gas and old coal power plants to capture most of their carbon dioxide by 2032. Revoking this and other rules governing power production, relaxing environmental standards, expediting projects, and supercharging federal fossil fuel leases make up a suite of actions meant to clear as many impediments as possible.
• The tech industry has a solution in the works — co-locating power with the data centers: having dedicated, private energy production on-site, owned by and tailored specifically for the tech firm. Trump is a big supporter, telling the World Economic Forum in Davos that co-locating “was largely my idea.” But in November, the Federal Energy Regulatory Commission (FERC) unexpectedly rejected a proposal that would have Amazon pulling additional power directly from a neighboring nuclear plant. However, an open meeting last week initiating a review on the topic indicates that the commission is willing to be open-minded, even if final rules governing colocation could take until next year.
• FERC has authority over the interconnection and transmission issues that are hampering new supply from entering the grid. A fiercely independent agency, Republican Chair Mark Christie has pushed back on recent attempts from Trump to assert more direct control. Regardless of who’s calling the shots, both (along with the commission’s Democratic members) are on the same page about the necessity of speeding up processes that currently take years. Despite major rules intended to streamline connecting to the grid, implementing them will itself take years and won’t be a silver bullet for interconnection and transmission problems.

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