Trump forces European countries to find solutions

Donald Trump has won the US presidential election by clear numbers. It knows many changes not only in US-European relations, but also in the direction in which Europe is developing.

Kamala Harris was the desired president in Europe because he represented continuity for transatlantic relations. If Harris had won, many things would have continued as before: support for Ukraine, NATO, climate action and trade policy.

Trump’s side is different. Trump has said he will end the war in Ukraine the day after his election and has threatened to impose large import tariffs on European and Chinese products.

In fact, Trump’s true impact on Europe will only become clear once he takes office and begins to implement his visions, as the president has proven to be unpredictable and volatile.

Trump’s intentions to support oil and gas production and to put up caps Joe Biden the green transition IRA support package can be a favor to the EU, which threatens to fall behind the US in green transition investments. On the other hand, Trump’s desire to withdraw the USA from the Paris climate agreement can significantly slow down global climate action.

In Europe, however, the biggest immediate concern is about tariffs, even though the Commission has prepared for negotiations and countermeasures. Tariffs and the escalation of the situation into a trade war would be a blow to European companies and the economy.

Trump’s domestic political intentions to deport immigrants from the United States could cause a labor shortage and inflation, which would force the country’s central bank to raise interest rates. If the ECB were to follow the Fed’s line in the traditional way, it would harm Europe’s fragile economic situation.

Probably the most significant effect is on defense. It is unclear what Trump will actually do about the war in Ukraine and whether he will end financial aid. Ukraine cannot survive without support, so Europe must take the bull by the horns. Trump can also use US NATO membership to blackmail his allies to increase defense funding.

According to some views, Trump’s victory is exactly the bitter lime that Europe needs to swallow in order to become more united and make difficult decisions.

Anticipatory messages were received already after the result was known. Chancellor of Germany Olaf Scholz commented that the main message of Trump’s victory is that “the EU must be united”.

At the end of the week, the prime ministers and presidents of the EU countries will gather in Budapest for an informal summit. Trump’s re-election is certainly telling.

The matter that the decision-makers of the EU countries will have to take a stand on in the near future is Ukraine’s military and financial support. Since few member countries have extra billions in their pockets, defense bonds financed with joint debt can start to be attractive. After all, the EU’s collective debt has already been used to support Ukraine.

It is clear that Europe will not get any easier. It can be good – Europe develops in crises.