Donald Trump won the U.S. presidential election for the second time late last year, snatching key battleground states from his opponent Kamala Harris’s clutches.
As Trump 2.0 becomes a reality, Europe is poised to enter a new geopolitical and trade quagmire with its biggest trading partner. A bid to buy Greenland and a slew of executive orders on day one are just some examples of what Trump has in mind.
The new U.S. president has promised to make his term in office the “golden age of America.” That’s a loaded statement—especially for countries in Europe that rely on U.S. trade.
What will Trump do?
Trump has repeatedly teased hiking trade tariffs by 10% to 20% (which he touts as the “most beautiful word”) to protect America’s domestic manufacturing industry. But that will make European goods more expensive and less appealing to American buyers.
During his first term in office, Trump imposed tariffs on European aluminum and steel. While President Joe Biden subsequently suspended the tariffs, they haven’t been scrapped yet.
Tariffs are just the tip of the iceberg. Trump has spoken about jacking up tariffs on China by up to 60%—a measure that the European Union has recently resorted to in the electric vehicle industry to limit cheap Chinese vehicles flooding its market.
But if the U.S. follows through with its hefty levies on China, it could prompt a full-fledged trade war.
“In his first term, Trump was obsessed with the U.S. trade deficit with the EU. In his view, this is no different (other than being smaller) to the U.S. concerns about its trade deficit with China,” Zach Meyers, assistant director of the Center for European Reform, told Fortune.
In 2022, the U.S. trade deficit with China was $367.4 billion, while with the EU, it was $131.3 billion. Tariffs could hit Germany, Europe’s biggest economy and an automotive trading hub, especially hard, with its GDP sliding as much as 1.5% in the next few years.
“If the U.S. applies more tariffs on China, that risks a larger volume of Chinese exports being dumped in Europe. In turn, that could force the EU to follow the U.S. in increasing tariffs in order to protect European industry, raising the risks of an all-out trade war with China,” said Meyers.
Under a Trump-led America, Europe’s focus should be to strike a good deal that exempts its goods from being charged.
But that’s easier said than done, Meyers points out.
“Trump sympathizers like Viktor Orbán in Hungary and Giorgia Meloni in Italy will break ranks and secure deals for their own countries, leaving the rest of the EU out in the cold.”
Will Trump embolden right-wing Europe?
The pro-Trump club and its right-ward push is yet another cause for concern in Europe. Recent elections in the region have already shown the growing power of right-wing leaders, including in The Netherlands and Hungary.
The likes of Orbán, who posted on Facebook in November celebrating Trump’s “road to a beautiful victory,” have supported the Republican candidate and have taken a page from his book on foreign affairs.
Trump becoming America’s president could make “right political forces feel emboldened,” Steven Blockmans, an associate senior research fellow at the Centre for European Policy Studies, told Fortune.
“They’ll feel strengthened. They will have more appeal, I suppose. There are very strong streaks of autocracy in Trump’s approach,” Blockmans said, cautioning that other factors also influence the popularity of Europe’s political figureheads beyond the influence from across the Atlantic.
How Trump addresses the Russia-Ukraine war could also add to Europe’s litany of problems. He has previously blamed Ukraine for starting the war, vowed to stop funding its defense efforts, and has also promised to put an end to it in a single day.
Russian President Vladimir Putin sees Trump’s win as a chance to “reset” the country’s relations with the U.S. That could either end well for Europe as it continues to lean on America’s defense guarantees or turn awry as it fights to secure its borders with limited support from its transatlantic pal.
Either way, a Trump presidency will not be a walk in the park for Europe—but just how thorny the path is remains to be seen.
A version of this story originally published on Fortune.com on November 6, 2024.
