A European response is in the offing to emerging U.S. unilateralism. The German government approved a €500 billion infrastructure fund and introduced plans to ease its debt brake rule to accelerate military spending, while the EU has committed to finance European defense via the issuance of common European debt. Persistent uncertainty, notably around the U.S. administration's trade, foreign policy, and financial market strategies, may be a greater economic risk to confidence than tariffs. Credit quality for financial institutions, insurance, and much of the rated corporate universe strengthened in recent quarters, providing some buffers to protect against the economic costs involved in navigating the uncertain trading environment. For fiscally constrained European NATO members (apart from Germany), the annual security spending increase in national budgets is unlikely to exceed 0.2 to 0.3 percentage points (ppts) of GDP, market conditions allowing.