The return of Donald Trump to the US Presidency in 2025 has dramatically impacted on the EU’s fiscal framework. In response to Trump aims to disengage the US from guaranteeing the security of Europe, the EU has triggered the national safeguard clause of the Stability and Growth Pact (SGP), the center piece of the EU fiscal rules, reformed in 2024 after three years of suspension because of the pandemic. The decision exempts member states, for four years, from complying with the EU deficit rules for defense expenditures. At the same time, Germany, the member state championing fiscal stability, ditched decades of commitment to Schwarze null, and passed a constitutional amendment which enables annually spending of over 1% of gross domestic product (GDP) on defense in derogation of the Schuldebremse, the constitutional debt brake (formally remained operative for the other spending). The Trump effect thus led the EU to set aside again EU and national fiscal rules to increase defense spending. The outcome is an EU operating in a sort of fiscal limbo.