Well, the Trump show’s just been rebooted. And Europe can’t look away.
European policymakers have spent months preparing for Donald Trump’s potential return to the White House. But let’s be honest, they don’t really know how this will all unfold.
For instance, Trump has promised to slap tariffs on every single European good entering the U.S. So the EU has preemptively locked and loaded some retaliatory measures. Seems logical — but that only works in a world where Trump is not erratic and impulsive.
Also, remember Trump’s boast that he could instantly “end” Russia’s war in Ukraine? Whatever his bluster means, it has ramifications in Europe.
And that’s just what’s consuming the headlines. Trump’s victory will inevitably affect every area of EU policy, from drug pricing to green technologies to artificial intelligence standards.
So buckle up while POLITICO futurecasts what this all means for the EU. The remake will be unmissable, if nothing else.
Energy
Trump has boiled his energy policy down to three words: “drill, baby, drill.”
His vow to boost oil and gas extraction, and ship more fossil fuels abroad, has raised eyebrows among environmentalists but has industry eyeing big profits. Despite American exports of natural gas hitting a record high last year, Trump wants to ax a Biden administration freeze on permits for new liquified natural gas (LNG) projects, a restriction that creates uncertainty for the European market.
His crusade against the green transition could be less crowd pleasing. Some in Trump’s camp want him to scrap the Inflation Reduction Act (IRA), which allocates more than half a trillion dollars for projects like clean tech, hydrogen and renewable energy. That program, however, has created jobs in key states and drawn business away from Europe, giving the U.S. a head start over the EU in industries such as wind, solar, alternative fuels and electric vehicles. Its repeal could be a boon for Brussels as it sets its sights on competition with Washington.
Climate
Donald Trump’s victory spells environmental disaster. To avert catastrophic levels of global warming, the world has very little time to dramatically slash emissions. Yet under Trump — who plans to pull the U.S. out of the Paris Agreement once again and double down on fossil fuels — the pace of the green transition is projected to slow down rather than speed up.
With the U.S. responsible for more than a tenth of planet-warming pollution, any shift in American climate policy has global consequences. A hotter planet means more disasters, including within the EU, which has to prepare accordingly for worse climate impacts. And some fear Trump’s win may reduce momentum for climate action worldwide, putting the Paris Agreement goals even further out of reach.
Funding for climate action in poorer countries is the hot topic at this year’s global climate summit starting Nov. 11, and Trump’s victory may plunge the conference into uncertainty — with many looking toward the EU to step up and fill the leadership vacuum. Yet without U.S. backing for much-needed reforms of the global financial architecture to cope with the climate challenge, debt-distressed developing countries will struggle to raise the necessary funds to switch away from fossil fuels.
Trade
“America First” will again sum up Trump’s approach to trade policy.
He’s vowed to bring back jobs to the U.S. and punish friends and foes with across-the-board tariffs of 10 or 20 percent (and up to 60 percent on goods coming from China), despite economists’ warnings of a detrimental impact on U.S. economic growth and higher costs for consumers.
Trump’s trade policy is focused more on reducing the sizable U.S. trade deficit than on opening up new market opportunities. Trade policy will mainly be seen through the national security and geopolitical lens.
The EU failed to capitalize on the détente with the Biden administration to fix lingering trade disputes on steel and aluminum tariffs, green subsidies on electric cars, and reviving the highest court of the World Trade Organization. These rifts are expected to worsen under Trump.
The most immediate stress tests for Brussels and Washington will be to find a solution to the EU’s paused retaliatory tariffs against Washington (the truce elapses in March 2025), as well as its aircraft dispute over subsidies for Airbus and Boeing by 2026.
Central banking
Call it Trumpageddon.
If the president-elect goes ahead with even half the ideas he’s floated on the campaign trail, expect serious pain for the European economy. Analysts at Goldman Sachs said the euro could drop as much as 10 percent against the dollar if the new administration enacts its across-the-board tariff plan, while earnings among a group of Europe’s largest companies could fall by more than 5 percent next year.
Trump has explicitly called for more White House interference into the working of the U.S. Federal Reserve — America’s central bank — which has made its independence from politicians into a calling card. That could have huge implications for the stability of the global financial system, as well as the continued dominance of the dollar as the world’s reserve currency.
Less direct, but no less impactful, are plans to deport undocumented migrants by the millions. It’s not yet clear who will be in the crosshairs of the mass deportation program, but given the importance of migrant labor, even the undocumented kind, for key sections of the American economy, there will be an unavoidable upwards pressure on prices. That could translate to higher U.S. interest rates, and put pressure on the European Central Bank to follow, screwing with an already shaky economic recovery.
Sustainability
It’ll come as no surprise to Brussels that the president-elect is not a fan of green policymaking.
While the Trump administration probably won’t impact Brussels’ own rule-setting on green issues, Trump’s animosity for environmental policy will widen the gap between the two blocs on the international stage and harm the EU’s ambitions to promote multilateral cooperation. Under Biden, efforts to mandate American businesses to report on their environmental footprint were already stalling, frustrating Brussels’ hopes of creating global standards so companies operating in Europe don’t feel unfairly burdened. Under Trump, Brussels can kiss that dream goodbye.
Waltzing into the Oval office for a second time, Trump could also start backtracking on international commitments made by the U.S. The Republican Party is strongly against the U.S.-backed proposal to limit plastic production as part of the ongoing negotiations for a global plastics treaty. This could crush the EU’s hopes of American support in the final round of talks later this month.
Financial services
Trump’s victory will set the teeth of the world’s finance regulators on edge. Many global rules aimed at preventing another global financial crisis are drawn up in international bodies like the Financial Stability Board, IOSCO and the Basel Committee on Banking Supervision – all of which could be under threat from an uncooperative U.S.
In the short term, the Trump win looks like bad news for the global rollout of bank capital rules known as Basel III, drawn up after the 2007-2008 crisis to make sure lenders have enough reserves to cope with economic shocks. The U.S. has already changed its plans and postponed its rollout of the global rules after massive lobbying from the banking industry, and now could well scrap the rules altogether, prompting fears of financial instability.
But Wall Street is likely to be happy with Trump’s “America First” economic policies which boost manufacturing and loosen regulations, particularly on competition. Trump didn’t rock the boat on financial services policy the first time around, stacking regulators with Wall Street grandees. But while campaigning this time he launched a crypto venture. So the jury’s out on that one.
Health
In his previous stint as president, Trump attempted to curb drug prices with little impact. Since then, the Biden administration has used the IRA to push through far-reaching drug price restrictions for people on Medicare, the health insurance for older Americans. Trump is unlikely to roll this back, meaning Big Pharma in the U.S. and Europe will be considering their investment options as both regions push to limit pharma profits.
Global health advocates might also be fearing that Trump will once again withdraw from the World Health Organization (Biden overturned Trump’s previous withdrawal on his first day in office). The U.S. is the largest funder of the U.N. body, so its disengagement would have a huge impact on global health projects.
Abortion has been one of the top voter concerns this election campaign. Trump, who claimed victory for overturning women’s right to abortion via Roe v. Wade, has since said he would veto a federal ban, leaving power with the states on the extent to which abortion is or isn’t allowed.
Mobility
Donald Trump’s victory is likely to hurt European carmakers. “I want German car companies to become American car companies,” Trump recently told his supporters, promising “the lowest taxes, the lowest energy costs and the lowest regulatory burden” for automakers that choose to move production to the U.S. and “a very substantial tariff” on the others. Republicans also promised to cancel Biden’s electric vehicle mandate, which aims to ensure that half of all new cars and trucks sold in 2030 are zero-emission.
Trump’s reelection could also spell bad news for Airbus and the rest of the European aircraft sector, with a possible wave of aerospace protectionism aimed at rescuing Boeing from troubled waters. It also remains to be seen if Trump will maintain his skepticism of green tech policies or continue to subsidize sustainable aviation fuels, which benefited massively from the Biden administration’s tax cuts under the IRA.
As for shipping, which is most exposed to the negative effects of tariffs, the sector will be closely watching any type of trade war that a second Trump administration might launch.
Defense
A Trump win means Europe can no longer — or at least much less — rely on the U.S. for its defense and security. Donald Trump threatened during his first term to leave NATO and has repeatedly said on the campaign trail that Washington wouldn’t come to the rescue of allies who don’t invest enough in their military in case of a Russian aggression.
In a way, this may be a blessing in disguise for the EU, forcing European governments to work more closely together and make bold decisions — such as agreeing to joint borrowing to boost the bloc’s defense industry. France could revive discussions on the European aspect of its nuclear doctrine, while Brussels and London could accelerate talks for a defense and security agreement. Most countries would likely raise defense spending as much as possible.
On the other hand, we may see European capitals bilaterally try to curry favor with a Trump administration to ensure Washington remains interested in their security, namely by increasing even more purchases of U.S.-made weapons when the European Commission is trying to incentivize EU countries to buy local.
The Trump win could mean the end of U.S. military aid to Ukraine and pressure on Kyiv to negotiate a peace deal with Russian President Vladimir Putin, even if the terms are more favorable for Moscow.
Tech
Under Biden, the EU was on speaking terms with the U.S. on tech. The Trump win could change that by spelling the end of the U.S.-EU Trade and Technology Council, the biannual transatlantic political gathering founded in 2021 as a place for the U.S. and the EU to discuss tech policy and coordinate on topics such as semiconductors and artificial intelligence standards. The collapse of such a diplomatic backchannel could come when international alignment on AI governance is needed the most.
Another liability is Trump’s proximity to Elon Musk, the owner of X, who has become a big Trump supporter. If the EU fines X for breaches of the bloc’s content-moderation rulebook, the relationship between Trump and the European Commission could sour very quickly and reinvigorate a well-known narrative that the EU is only trying to “take U.S. Big Tech companies down.”
Competition
A Trump win opens up an uncertain era, as he hasn’t expressed clear lines on industrial policy or antitrust regulation, beyond an “America First” approach. While no fan of Big Tech, he has expressed frustration over European efforts to rein in American companies. He told a podcast in October that Apple Chief Executive Officer Tim Cook had called him to complain about an EU antitrust fine and losing a court ruling that required it to hand over billions of euros in back tax.
He appears to oppose U.S. and EU antitrust efforts to split off parts of Google’s business, saying that “China is afraid of Google.” Trump has been backed by tycoon Elon Musk who has run into several digital regulation battles with the European Commission.
Ultimately, Trump’s win may speed up European efforts to rely less on the U.S. as a partner, pushing on with an economic security strategy that emphasizes European production and a wide range of international suppliers and markets. That could see more pressure within Europe for EU merger reviews to allow bigger European companies and for more government help to boost European champions.
Cybersecurity
The biggest cybersecurity impact of a Trump win is that his administration could remove Israeli spyware firms from the U.S. entity list of companies deemed a national security concern. Some of them, like NSO Group, have already been lobbying Republicans. The U.S. could also abandon American-led international efforts to clamp down on the proliferation and misuse of commercial spyware, which would have a ricochet effect on global efforts to rein in the surveillance tool.
Any distancing of the U.S. from NATO under Trump could also affect the Western alliance’s cyber capabilities.
Gabriel Gavin, Zia Weise, Camille Gijs, Marianne Gros, Kathryn Carlson, Helen Collis, Tommaso Lecca, Laura Kayali, Pieter Haeck, Aude Van Den Hove, Antoaneta Roussi and Cory Bennett contributed to this report.
