Summary of an article by Kliment Robev
In brief
Weeks after Donald Trump’s election victory, Kliment Robev analyses what “Trump 2.0” means for Europe: new tariffs on European exports and higher defence spending.
Key points
- Markets reacted by pricing in US growth in a pro-inflationary environment: US indices rose and Treasury yields temporarily climbed.
- Europe is one of America’s largest trading partners — about €1.5 trillion in trade a year. A universal tariff of 10–20% would be a serious brake on an already sluggish European economy.
- The most exposed are Germany (exports to the US of €157.7 billion in 2023), Italy and Ireland — together 55% of EU exports to the US. Among the hardest hit would be German carmakers, with exports of €23.41 billion.
- A trade war would hurt the EU more, because trade with the US is a larger share of European GDP than of American GDP.
- Higher defence spending creates a tailwind for Europe’s defence industry — Robev points to companies such as Rheinmetall, BAE Systems, Saab, Thales and Leonardo. Peace in Ukraine might initially weigh on their shares, but in the long run Europe will need its own defence.
Context
Published on 19 November 2024, two weeks after the US presidential election.
Views reflect his position at the date of publication and are not investment advice. Regulatory information
