Trump or Harris or ...? What Europe must prepare for

Conclusions about future economic policy can be drawn from the experiences of the two terms of office of Trump and Biden/Harris. While Trump focused on tax cuts and deregulation, Biden/Harris set up a broad support program with the Inflation Reduction Act. It can be assumed that both policy approaches would be continued or reintroduced in a second term of office and that Kamala Harris would continue the policies of the previous administration in principle. Although the Inflation Reduction Act would not be replaced by a new program of a similar dimension, it would not be completely abolished under either president. The investments financed by the program are also too popular among Republicans. There would be considerable differences in tax policy. Under a Democratic presidency, parts of Trump's tax cuts would not be extended, especially for the highest earners. Under Trump, the policy of tax cuts and further deregulation - also and especially with regard to climate and environmental requirements - would be continued. International commitments regarding climate targets would be as unlikely as a more ambitious domestic climate policy. On the contrary, he has announced the expansion of fossil fuels with the aim of supplying energy as cheaply as possible. Looking at the economic development of the respective terms of office, no clear result can be derived. Trump's economic record was most recently characterized by the coronavirus crisis, while an impressive recovery process has begun under Biden/Harris.

For Europe, an election of the current Vice President Harris would essentially be a continuation of previous policies. No major trade policy initiatives are to be expected, but no erratic tightening either. Biden's and Harris' policies can be characterized as moderately protectionist. Their principled support for multilateral, rules-based cooperation is only partially effective. Harris would probably not seek any new free trade agreements as president either. She would probably continue her current policy of advocating greater diversification of supply chains and a common stance of the free West towards China. There are good starting points for cooperation with the European Union (EU) here.

A second Trump term, on the other hand, would be characterized by unpredictability, aggressiveness and increased protectionism. Both European security and Europe's foreign trade orientation would face major challenges in this case. He would use tariffs as a means of exerting pressure in order to achieve short-term advantages for the USA and would disregard or even abandon multilateral regulatory systems and institutions. Trump has threatened to erect a protectionist wall around the USA. Europe would also have to reposition itself in terms of security policy if the protection provided by NATO were to be weakened.

Europe must prepare itself, especially in the event of Donald Trump's re-election. This includes setting clear priorities in order to know where concessions can and cannot be made. Open flanks such as the justified criticism of insufficient defense spending must be closed quickly. In addition, offers must be prepared and withheld, even if the measures would be advantageous on their own. And finally, counter-positions must be developed to respond to customs threats, for example. European interests can only be safeguarded with a deal-maker President Trump by taking a clear position.