Urgent Need to Strengthen Our Economic Competitiveness

Donald Trump has been elected the 47th President of the United States, with his second term set to begin on 20 January 2025. Commenting on the Republican’s victory, ZEW President Professor Achim Wambach remarks:

“Europe benefits from open markets. However, Trump plans to raise tariffs and lower corporate taxes in the US. This will only deepen Europe’s economic difficulties as European companies will feel even more compelled to produce in the US rather than export finished products there. Germany and the EU urgently need to strengthen their own economies; only a dynamic single market can protect us from being crushed between the US and Chinese economic blocs.

Europe also relies on the US for military protection. It’s likely that Donald Trump will push NATO countries to take on greater responsibility. Europe should respond to this with a unified effort; fragmented defence policies are not up to today’s geopolitical challenges.

Europe has committed to the Paris Climate Agreement and pursues ambitious climate policies. With Donald Trump, a climate sceptic has become president. The extent to which he will scale back US efforts to cut harmful emissions remains to be seen, as he is dependent on Congress and the Senate. However, support for Europe’s climate policies could wane if they are perceived to lead to job losses, especially if the US economy continues to grow robustly and emissions there are either not reduced or are reduced only slightly. The EU and Germany must ensure that their climate efforts are as cost-effective and efficient as possible, stimulating green growth while avoiding social disruption.”