Katie Kapodistria: What Donald Trump’s re-election could signal for Europe

The 2024 US presidential elections have concluded, undoubtably about to shift the dynamics of US-EU relations.

Donald Trump’s return to the White House marks a potential shift in EU-US relations, poised to affect key areas including defence, trade, climate policy, and global security. Trump's "America First" platform, coupled with a strong stance on reducing US dependencies, may lead Europe to rethink its strategies across these domains. As Europe prepares for this evolving landscape, it faces both challenges and opportunities to bolster its own autonomy and resilience.

Defence and Security

Trump’s past criticism of NATO and calls for greater burden-sharing are likely to re-emerge, intensifying pressure on European countries to strengthen their own defence capabilities. With Trump’s inclination to reduce America’s NATO commitment, European nations may feel compelled to accelerate independent defence strategies, such as the EU’s Strategic Compass. This shift could push Europe to increase its defence spending, with talks around joint EU military capabilities gaining traction. A Trump administration's approach toward Ukraine is especially concerning: Trump has previously advocated for a swift negotiation with Russia, potentially reducing US support for Ukraine. In response, Europe may have to step up its own security provisions in Eastern Europe and boost direct financial and military assistance to Ukraine to counteract any perceived wavering in US commitment.

Trade and Economic Policies

Trump’s trade policies, including potential across-the-board tariffs, could reignite transatlantic trade disputes. This shift toward protectionism would prompt Europe to retaliate, particularly as US tariffs could affect key sectors like automotive and agriculture. Trump's critique of multilateral trade frameworks and the World Trade Organisation (WTO) may further destabilise global trade norms, challenging Europe to fortify its internal markets and diversify trade relationships outside the US. Additionally, if Trump successfully dismantles Biden's Inflation Reduction Act, Europe might regain some competitiveness in green technology sectors, alleviating the recent “green subsidy” competition between the EU and the US.

Climate Policy

Trump’s strong stance against climate agreements may lead to another US exit from the Paris Agreement, reducing global momentum for emission reductions. Europe, however, remains committed to ambitious climate goals under the European Green Deal and could step up as a global climate leader. In the absence of US cooperation, the EU may push for stricter carbon border taxes to shield its industries from imports that do not meet its environmental standards. A Trump administration’s support for fossil fuel expansion, including plans for increased liquified natural gas (LNG) exports, might create short-term benefits for Europe’s energy needs but would also clash with the EU’s long-term climate goals.

Energy and Sustainability

Trump’s return may strain US-EU collaboration on sustainable energy policy, as he prioritises fossil fuels and considers repealing climate-focused legislation like the Inflation Reduction Act. Europe could view this shift as an opportunity to champion sustainability standards more aggressively. Yet, Europe’s aspirations to align global standards on issues like carbon reporting or plastic reduction may be hindered without US backing, especially in international negotiations​.

Geopolitics and Technology

A second Trump presidency could lead to the dissolution of the US-EU Trade and Technology Council, established to harmonise technology standards and coordinate on issues like AI and semiconductors. This decoupling would push Europe to develop its own tech policies independently. Furthermore, Trump's close association with major tech entrepreneurs may deepen regulatory friction, particularly if the EU enforces strict data and content regulations on American tech firms operating within Europe. This rift could spur Europe to prioritise tech sovereignty, investing more heavily in homegrown innovation.

Economic and Financial Implications

Trump’s plans to apply pressure on the Federal Reserve and his potential influence over US central banking could destabilise global markets, affecting the Eurozone directly. A scenario where Trump leverages the dollar to gain trade advantages could weaken the euro and challenge European economies already under inflationary pressures. Additionally, Trump’s proposed tariffs could harm European exporters and potentially lead to countermeasures that would elevate financial instability between the two regions.

Health and Global Governance

Trump’s stance on the World Health Organisation (WHO) could further isolate the US from international health initiatives, potentially leading Europe to assume a larger role in global health leadership. If Trump withdraws US funding from the WHO, Europe may have to bridge the funding gap to sustain key global health projects. In healthcare policy, both the EU and US face pressures to regulate pharmaceutical costs, and Trump's stance might indirectly benefit Europe by dampening US pharma competitiveness, especially in terms of drug pricing regulation.

Potential Implications for EU Cohesion and Strategic Autonomy

While Trump's policies may present direct challenges to Europe, they could also spur deeper EU integration and self-reliance. European leaders might see this shift as a call to reduce dependency on the US, particularly in defence and technology. France, for example, could renew efforts to fortify its nuclear doctrine within a European framework, while the EU might consider ambitious funding mechanisms, such as Eurobonds, to support collective investments in critical areas like defence and green technology. A Trump administration’s unilateralist approach might galvanise the EU toward structural reforms to safeguard its geopolitical standing, even if those changes are challenging.

*Katie Kapodistria, Senior Public Affairs Consultant at SEC Newgate EU in Brussels