Europe in Election Fever: Between Trade Policy Challenges and Security Costs

In the tense period leading up to the US election on November 5, Europe faces a choice between a challenging Kamala Harris presidency or an unrelenting second encounter with Donald Trump. Both scenarios pose their own challenges for Europe, particularly in the areas of trade policy and the distribution of rising security costs among NATO allies. While a Harris presidency is considered "Biden continuity" with little concession expected, "Trump 2.0" promises serious risks. A potential withdrawal of US support for Ukraine would force European governments to quickly increase their defense spending. Imminent global trade tensions under Trump could leave Europe as a major loser, especially since the continent generates nearly half of its economic output from exports. A rare field of bipartisan consensus in the US election campaign is anti-China measures. For export-oriented European companies like ASML, this could raise the question of whether it is possible to maintain trade relations with both the US and China. Despite the uncertainties, it is estimated that Europe-wide reforms, as recently proposed by Mario Draghi, could be stimulated by the US election. The growth of the European economy could also be impacted by the foreign policy uncertainties that both US candidates bring. In view of these challenges, European decision-makers are working to best prepare for the election outcome's impact.