Economic competition between America and Europe broadened, further straining their strategic relationship. Europe continued to grow stronger economically as the U.S. economy, battered by the cost of the Vietnam War and trade imbalances, fell into a prolonged slump. In response, President Richard Nixon imposed a 10 percent surcharge on foreign imports, which hit Western Europe hard in the pocketbook, and pressured European countries to manipulate currency exchange rates to make the prices of U.S. exports more competitive.

At the same time, U.S. Secretary of State Henry Kissinger grew irked by America's traditional European allies, after what he saw as a failure to back up the United States in its behind-the-scenes confrontation with the Soviets during the 1973 Arab-Israeli War. But European governments were equally disillusioned with the U.S., which they saw as neglecting the American-European relationship. Kissinger tried to heal the rift by proclaiming 1973 "The Year of Europe" for U.S. diplomats, but his efforts met with a tepid response. (French President Georges Pompidou retorted that "for Europeans, every year is 'The Year of Europe.'")

U.S.-European relations continued to founder after Nixon was succeeded by Presidents Gerald Ford and Jimmy Carter. Given that the Soviets had achieved nuclear parity with the United States, Europeans worried that the 7,000 U.S. nuclear bombs and warheads on their continent made them an inviting target for a Soviet attack — one to which the United States might not respond, for fear of endangering U.S. cities. Carter negotiated an arms reduction agreement with Soviet leader Leonid Brezhnev in Vienna in 1979, but the Soviet invasion of Afghanistan that same year caused significant consternation among U.S. policy-makers and the treaty never was ratified. European fears and protests escalated.

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