The Trump administration’s ongoing Pentagon review of US force posture in Europe, set to conclude by December 2026, forms the central driver of market sentiment around potential NATO withdrawal. Recent actions include the May 2026 withdrawal of roughly 5,000 troops from Germany, cancellation of additional rotational deployments, and reductions in allocated aircraft and naval assets, framed as shifting conventional defense burdens to European allies under a “NATO 3.0” approach prioritizing the Indo-Pacific. Administration officials, including NATO Ambassador Matthew Whitaker, have repeatedly stated there are no plans for formal exit while pressing allies on spending and access. Congressional barriers remain prominent: the 2023 Kaine-Rubio provision requires prior legislative approval, reinforced by the newly introduced bipartisan NATO Shield Act mandating consultation and prohibiting unauthorized funding. These structural constraints, alongside bipartisan resistance and institutional checks, limit prospects for treaty termination even amid sustained pressure on alliance contributions and operational leadership transfers.