Ever since the creation of NATO and the launching of the Marshall Plan after World War II, the United States has been the dominant voice in the transatlantic community. Recently, however, both the security and economic dimensions of U.S. leadership have begun to erode. This erosion, coupled with a more integrated and stronger European economy, has led to a realignment of the transatlantic relationship. The prospects for U.S. growth in the next decade are uncertain, while the outlook on the other side of the Atlantic is for a relatively more prosperous Europe with several more countries at or near U.S. levels of per capita income. Economic disparities within Europe will decrease, and political and economic integration both within the European Community (EC) and between EC and non-EC countries in Europe will increase substantially. Europe will play a more assertive role in economic issues. Unilateral U.S. leadership in international economic and financial matters cannot be sustained, and continued U.S. leadership in the liberalization of global trade is unlikely. The political and economic changes in Europe will also force a change in the U.S.-European security relationship. The integration of the European defense industry will also affect transatlantic relations. The authors suggest that U.S. acceptance of a more balanced partnership with Europe, in return for Europe's willingness to overcome parochial preoccupations in economic affairs, would lay the basis for a new partnership in the transatlantic community.