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The reaction of the capital markets to Trump's election victory clearly showed how the players there view the consequences for Europe: negatively. The prospect of goods from Europe generally being subject to import tariffs could indeed prove to be an additional burden for an already weakly growing economy. The possibility of a new US administration calling NATO into question or ultimately demanding higher defense spending from European members will already be worrying some finance ministers. And a cessation of US support for Ukraine and a subsequent deal between Trump and Putin over the heads of the Ukrainians carries the risk of the EU's security interests being ignored.
However, looking at Trump with a mixture of fear and concern is not enough. Instead, Europe must now finally come to terms with its own structural weaknesses. These have been known for a long time, but at the latest since Russia's invasion of Ukraine, they have had significant negative consequences: The high dependency of European economies on exports is increasingly problematic in a world in which global trade hardly provides any positive impetus and threatens the emergence of decoupled blocs between which Europe, with its previously extensive trade relations with both sides, would have to navigate back and forth. Trade agreements with other partners that could alleviate the problem have been rejected in the past for ideological reasons and are not really making any progress now. It is now a truism that the EU must define its own geopolitical interests, make changed coordination processes and institutional arrangements to represent them and also provide resources to implement them - but this has not yet been reflected in practical policy either at European or national level.
If Kamala Harris had won the election, it would have been feared that European governments would have sat back with relief and carried on as before. This has now been exposed as an illusion for all to see. Seen in this light, Trump's election victory offers European governments the chance to finally do what they should have done long ago, even without Trump: to invest significantly more in their own defense and competitiveness.
Europe must now make up for the failures of the past in a short space of time. The year 2025 will therefore be of crucial importance. A positive forecast could look like this: Europe agrees on an EU-wide, debt-financed program on a substantial scale to strengthen Europe's defense capabilities, to expand armament capacities and to coordinate related activities between EU states. This program may be supplemented by another for infrastructure investments to strengthen the competitiveness of European companies. From an economic point of view, the following should be noted: Debt at EU level with joint liability of the member states is not a recipe from the regulatory textbook and also harbors risks. This makes it all the more important to ensure that the funds are actually used in a targeted manner to strengthen the EU's own ability to act and competitiveness and, even more importantly, that they are supplemented by a comprehensive reduction in bureaucracy. If this could be achieved, we could perhaps say at the end of next year that Europe has finally taken steps in the right direction under the pressure of a Trump presidency.
