Europe’s economy faces sink-or-swim moment as Trump returns
Subscribe to enjoy similar stories. Wall Street’s verdict is clear: A second Trump presidency is likely to deliver a blow to an export-dependent European Union that is struggling with sclerotic economic growth and ever-multiplying political crises. Whether it will finally spark some change is the question for patient investors.
Since Wednesday, the day after the election, the S&P 500 has gained 3.7%. Meanwhile, the Euro Stoxx 50 and the FTSE 100 are down. Among those to shed the most market value have been clean-energy firms such as Vestas, carmakers such as BMW, consumer-goods companies such as Nestlé and Unilever and sellers of pharmaceuticals such as Roche.
They all sell a lot to the U.S. The U.S. is the top goods-export market for the European Union, and for Germany, with pharmaceuticals, machinery and vehicles topping the export list.
During the campaign, President-elect Donald Trump floated a 60% tariff on Chinese imports and a 10%-to-20% levy across the board. The think tank German Economic Institute estimates that such a measure could make the German economy between 1.2% and 1.4% smaller than it would have been by 2028. The core of the European Union’s export machine has been plunged into difficulties because of the end of cheap Russian energy, delays in joining the electric-vehicle revolution and an overreliance on selling to China.
Volkswagen last week announced the closing of at least three plants in Germany. According to FactSet, American customers make up 18% of its sales, about the same as the German market. “I want German car companies to become American car companies," Trump said last month while holding a rally in Savannah, Ga.
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