Europe Frets about Trump Presidency
27-member bloc has bad memories of Trump’s first term in office
Europe Frets about Trump Presidency
European policymakers have expressed concerns about a wide range of issues from climate change, security and trade if Donald Trump wins another four year term in office.
European Union (EU) officials fret that a Trump administration may pursue peace talks with Russia over Ukraine, which Moscow invaded in February 2022, and enforce spending commitments of 2% of GDP within the North Atlantic Treaty Organization (NATO), which only 23 of 32 NATO members achieve.
They are concerned that Trump may impose new tariffs and turn more isolationist, reducing Washington's role in global free trade policies and the energy transition. An EU official was recently quoted as saying how a second Trump presidency was “set to be just like 2016, but at the same time, so much worse.”
While it isn’t clear yet who will win the next US election, Trump has a strong chance with the momentum after a failed assassination attempt against the former president in Pennsylvania on July 13.
Traders on Polymarket gave Trump a 63% chance of winning while Vice President Harris had 32%, with Trump's odds mostly unchanged since Joe Biden announced his decision to drop out of the presidential race on July 21. On PredictIt, Trump's odds have dipped slightly from 60% on July 21 to 57% as of July 24, and Harris' odds rose from 40% to 45% in that time.
Bad Memories
The 27-member bloc has bad memories of Trump’s first term in office and his brash diplomatic style.
Trump imposed tariffs on European steel and aluminum exports, with the EU retaliating by putting tariffs on a range of US exports such as motorcycles, jeans and whiskey. He clashed with former German Chancellor Angela Merkel on security and energy issues, accusing Berlin of being “a captive of the Russians” because of its dependence on energy supplies.
Despite sending out “panicked warnings' ' driven by the previous term, European leaders and commentators should adopt “a more constructive approach' ' to a Trump presidency, Nadia Schadlow, a Senior Fellow at the Hudson Institute wrote on July 23.
“Imagine starting with the outlook that Trump could be someone they could work with, and putting in a little more effort to craft productive proposals for cooperation — beginning with areas of commonality,” Schadlow wrote.
The US, not Russia, is now the largest energy supplier to Europe, and Germany and other leading European nations have significantly increased defense spending following the Russian invasion of Ukraine which in turn supports NATO.
Annual military defense expenditure in the European Union from 2005 to 2022, by member state(in billion euros)
JD’s Nomination
Trump’s decision to appoint JD Vance, a strong opponent of aid to Ukraine and committed to “America First,” as his running mate has also raised alarms in Europe about Washington’s future policies.
One senior EU official called the pick a “disaster,” while Guy Verhofstadt, a member of the European Parliament and former Belgian prime minister, posted on X that “This is the biggest contest yet between two world views.”
“Destructive v. constructive politics, division v. national unity, dictatorship v. a democratic republic,” Verhofstadt wrote. “Harris can win this if she convinces voters to keep the American Dream alive!”
If the Trump-Vance ticket emerges victorious in November’s presidential election, voices from both the “Make America Great Again” elements of the Republican Party and the more traditional conservative internationalists in the GOP will ask more of Europe, according to the Hudson Institute.
As Vance told the Republican convention in Milwaukee, “We will make sure our allies share in the burden of securing world peace.”
Security Challenges
A new Trump administration will represent security and fiscal challenges for Europe, but it could also provide opportunities for the bloc. Strategic engagement with the US and attention to European priorities could improve the bloc’s security posture.
While the former president has threatened to withhold protection from NATO countries that have not paid 2% or more of their GDP, the countries below this threshold are in Western, not Eastern Europe. The former would not be excluded from a US security umbrella.
To fill any funding gap should the US decrease support, Europe could augment its aid levels with a loan equivalent to €50 billion, whose interest payments could be covered with the income from up to €300 billion in frozen Russian assets as negotiated between the US and Europe this year.
The Trump administration is expected to reinstate strong sanctions on Iran, which would reduce its ability to finance destabilizing proxy military operations in the Middle East and nuclear weapons development. A more robust sanctions regime would increase international security, benefitting Europe against further Iranian-fueled instability in the Middle East.
EU-US Trade
On trade, the former president has made little secret of his plans to revive his “America First” agenda. Trump has threatened to impose a 10% tariff on all imports during his second term, which has sent shivers across Europe because it depends heavily on exports to the US.
The EU’s export dependency on the US is greater than vice versa, according to the International Politik Quarterly in May. In 2022, EU exports to the US amounted to 2.8% of European GDP, while US exports to Europe amounted to only 1.4% of US GDP, it said.
That dependency is unlikely to end, given that global investment flows favor the US due to increased interest rates and a more dynamic economy, according to the June World Bank Annual Global Economic Prospects Report.
The EU should “pursue a trade-focused deterrence policy aimed at preventing a second Trump administration from adopting protectionist measures directed against Europe,” Markus Jaeger, Research Fellow, Center for Geopolitics, Geoeconomics and Technology, wrote at the International Politik Quarterly
“In anticipation of possible US measures, the EU should signal unequivocally, even before Trump's potential inauguration, that it is prepared to take prompt countermeasures and accept the costs of a trade conflict with the US,” Jaeger said.
A European Commission (EC) official said that it was “setting up a structured internal process to prepare for all outcomes from the US presidential election.”
EU-US China Cooperation
If the Trump administration imposes tougher sanctions against China, European companies could benefit, though, as Chinese counterpart products become pricier and American buyers likely seek cheaper alternatives from stable sources away from Asia.
Trade diversion effects from the US-Sino trade war, which Trump launched, contributed nearly $3 billion to the EU in the first half of 2019 alone.
The EU and the US could work together under the Trump administration to prevent China from dumping products in the bloc. They could collaborate to counter Chinese economic pressure through higher tariff barriers in Europe and form a Western trade wall, which would increase profitability for some European firms.
In recent months, the US and EU have accused China of flooding global markets with cheap products to cope with industrial overcapacity, though greater pressure against Beijing could amount to greater economic uncertainty for European companies operating in China or reliant on Chinese consumers.
“China’s economic aggression — including dumping goods at artificially low prices — is harming European industries, from automotive companies to plastics producers,” Schadlow wrote. Cooperation with the US to pursue a coordinated western policy could benefit the EU.