Europe’s economic outlook darkens with Trump’s White House return
Posted on November 12, 2024 |
A 2nd Trump presidency is expected to impact the EU's export-reliant economy, which faces slow growth and political issues, raising hopes that this might lead to necessary reforms.
After Trump’s win, the S&P 500 rose by 3.7%, but European markets like the Euro Stoxx 50 and FTSE 100 dropped. Companies heavily reliant on U.S. sales—such as clean energy, carmakers, consumer goods, and pharmaceutical firms—saw notable losses.
The U.S. is the EU’s top market, especially for Germany, with key exports including pharmaceuticals, machinery, and vehicles.
Trump's proposed tariffs—60% on Chinese goods and 10-20% on others—might reduce Germany's economy by 1.2-1.4% by 2028.
European exports face challenges due to the end of cheap Russian energy, slow growth in electric vehicles, and heavy reliance on Chinese demand, limiting their ability to expand in U.S. markets.
Limited EU production capacity makes it difficult to fully meet U.S. demand.
Airbus and Volkswagen manufacture some models in the U.S., but many key models are still made in Europe or Mexico, where Trump has suggested a 200% tariff.
The EU has managed to avoid crises, like the debt issues in the 2010s and the pandemic in 2020, by making minor adjustments, but it now faces a critical point where deeper economic reforms are essential.