This paper examines the association between geoeconomic fragmentation (GEF) and corporate capital structure dynamics. Extending dynamic trade-off models beyond their implicit assumption of a stable global economic environment, we conceptualize GEF as a systemic risk factor that is consistent with higher adjustment costs and a higher option value of delaying financial rebalancing. We measure GEF using the Composite Geoeconomic Fragmentation Risk Index (CGFRI), which captures structural vulnerability, policy uncertainty, coercive restrictions, and realized fragmentation. Using a dynamic partial-adjustment framework for 121,454 non-financial firms across the European Union over 2015–2024, we find that heightened GEF risk is associated with greater observed leverage persistence and a lower observed speed of adjustment toward target leverage. This baseline inertia association is robust across alternative estimators, instrument sets, variable definitions, and sample restrictions. Because observed adjustment reflects both the underlying incentive to adjust and the frequency of refinancing events (Danis et al., 2014), the estimated decline in the speed of adjustment should be read as a lower bound on the underlying change. Among firms with large deviations from target — the only regime for which the specification is well identified — the association reverses, consistent with a forced-adjustment mechanism whereby the cost of continued misalignment outweighs the option value of waiting; because the low-deviation comparison group could not be reliably estimated, we treat this result as exploratory. We find no robust evidence that firm-level exposure to external finance dependence, cash-flow volatility, growth opportunities, sector sensitivity, supply-chain complexity, or financial constraints systematically moderates the baseline association. The pooled EU association nevertheless masks meaningful cross-country heterogeneity: it is sensitive to the exclusion of any one of the three largest national samples, and an apparent German- vs. French-origin divergence reflects Germany specifically rather than legal origin.