Navigating the Future of Europe: Impact of the Second Trump Administration

Donald Trump’s coming to power in the United States is being perceived as the biggest challenge for Europe in 2025, with respect to European defence, trade issues, the China factor, and diplomatic engagement. As Trump’s transactional approach to international relations becomes evident, possibly a new era of transatlantic relations is set to begin. The unpredictable nature of Trump’s decisions and the impossibility to predict his next moves formulates a picture of how a second Trump presidency may affect Europe. His hyperbolic nationalism and his preference for bilateral agreements risks the future of the European Union integration project such that his victory is predicted to strengthen those EU-sceptic forces in Europe which want less European cooperation.^[1] Although the Trump administration is still a few weeks away, European politicians are bracing for the impact- some with celebration, but a majority with anxiety.

Europe’s great dependency on the US security and markets coincides with the geopolitical reality of crisis in Europe. Europe has been in a relative economic decline since the last two decades, has a shrinking and ageing population, is dealing with an energy crisis with a decline in energy-intensive businesses, and is facing a major vacuum of decisive leadership. With the collapse of the French and German governments within the span of a month, questions are being raised on the efficacy of the two biggest economies pushing forward the Union. Further, extremist, and populist movements questioning membership and accession to the EU, coupled with the Russia-Ukraine war, migration pressure, and terrorism as a security threat, stem from an unstable political situation, highlighting the political and social divisions within the continent.

At a time when the great power competition between the US and China is expanding away from a primarily economic conflict, there emerges the possibility of a new Cold War between the world’s two superpowers. While the US is in a ‘strategic competition’ with China, the European Commission has identified China as a ‘systemic rival’. ^[2] Economically, China’s rise as a global player has disrupted the traditional dominance of the West- the US and the EU. With Trump threatening Europe with tariffs and calling Europe a ‘mini-China’ and claiming that EU is ‘worse than China’, an expected transatlantic trade war could derail a combined effort to deal with the Asian giant. ^[3] Deep uncertainty about Trump administration’s policies on trade, economic policies, climate change, diplomacy, NATO, and Ukraine is expected to hinder European growth. With this backdrop, this article attempts to examine the future of Europe across a second Trump administration, on the economic, diplomatic, and security fronts.

Europe’s Economic Apocalypse

Europe can be seen to be facing a triple existential economic crisis- stagnation owing to the pandemic and the war, flagging competitiveness, and now Donald Trump. With Trump ready to reposition himself in the White House in a few weeks, European economy is more or less, running out of time. The continent’s economy is at an all-time low and is in the danger of crumbling. ^[4] European capitals, which are dealing with shrinking national budgets, struggling to rein in surging deficits amidst declining tax revenues, are in the fear of greater financial strains with the coming of the Trump administration. With the Union’s biggest member states Germany and France in political and economic turmoil, this blow could not have struck at a worse time. This is nothing less than an economic apocalypse for Europe, as Europe’s worst economic nightmare seems to have come true.

Dependent on the American market, Europe has never been more exposed to the evolving US trade policies. With its annual exports to the US priced at more than €500 billion, US is presently the EU’s biggest ally and its largest market. ^[5] If Trump follows through on his threats of imposing tariffs up to 20 percent on all imports from Europe, it would be doomsday for the European industry. The Central Banks of Europe are already warning that these expected tariffs could not only reignite inflation but also fundamentally undermine global trade practices.

Given his protectionist policies, the Trump administration is likely to be more isolationist, more transactional, and far less multilateral. Trump views the US to be at a disadvantage in terms of global trade rules of the IMF and the WTO, as expressed by him in his inclination in the previous term to withdraw from several multilateral international organisations. A dismantling of the WTO would cause the EU real GDP to fall by just over 0.5 percent, with Germany experiencing even larger declines. Further, the need to increase military spending due to Trump’s persistent criticism, threats to slash defence spending in NATO, and doubts about the American pillar of transatlantic security would further strain European budgets and increase deficits.^[6]

In addition, the president-elect’s Beijing policy and confrontational attitude towards China could pressure Europe to pick sides. European leaders are confronted with the dilemma between placating China or confronting it, fearing retribution. As China continues to slap new tariffs on European imports, majority of the European capitals have approved tariffs as high as 45 percent on electric vehicles made in China. ^[7] However, Germany has voted against it and Spain has abstained, exemplifying the internal divisions within the Union. In this context, it is important to note that Trumps presidency is only a final nail in the coffin for an already miserably failing European economy. The EU has been suffering from low productivity growth due to corporate sector’s failure to innovate and low expenditure by European capitals. As a result, Europe’s position has not only deteriorated in global competitiveness, but has fallen well behind US and China.

EU is in need to utilise its strategic leadership position as a normative actor to engage with the US, demonstrating that both blocs across the Atlantic stand to lose significantly from a trade conflict. Focusing on mutual economic interdependence, the EU can work towards a more constructive partnership, as opposed to the unilateral imposition of tariffs by Trump. ^[8] It is the need of the hour for the Union to scale up to regain sustainable competitiveness on the global stage, from the single market to the capital markets Union, through the development of a coherent external economic policy.

European Diplomacy and Foreign Policy

The election of Donald Trump is likely to cause a massive shift in the US post-Cold War policy towards Europe, underlined by a pull-back, and leaving Europe to the Europeans. Trump’s ‘America First’ nationalist approach, characterized by skepticism towards multilateral institutions and alliances is likely to shake the foundation of the transatlantic relationship which forms the bedrock of European foreign policy frameworks. US withdrawal from the Paris agreement on climate during Trump’s first term creates the likelihood of it happening again, leaving Europe isolated in its climate leadership ambitions, further hindering European progress on the same. ^[9] Similarly, his disdain for global institutions like the UN and the WTO might hinder Europe’s ability to advance cooperative solutions to global challenges, from pandemics to trade disputes.

A second Trump presidency can also complicate the EU accession process for countries like Moldova, Serbia, and Ukraine, largely influenced by the trajectory of US-Russia negotiations, leading the Union to look towards alternative forms of partnership or association. Trump’s policies also risk fragmentation of the EU integration project itself. If many of his policies were to be actively supported by some EU governments, fundamental EU principles would be at stake: rule of law, common foreign policy, and good neighbourly relations. In this context, safeguarding the EU’s founding pillars would clash with populist pro-Russia elements within Europe, leading to divisions on the future of the European continent.

In response, Europe may accelerate its quest for strategic autonomy, focusing on diversifying alliances and enhancing its role in global governance. Strengthening partnerships with countries like India, Japan, and Australia, and deepening cooperation within the Indo-Pacific framework, could become priorities. In a landscape where the EU strengthens its ties with external actors in response to a less predictable transatlantic relationship and increased geopolitical competition, enhanced cooperation could also be observed in defence, technology and connectivity, climate change and sustainable development, and in upholding a rules-based international order. Additionally, fostering greater cohesion among EU Member States will remain crucial to maintaining unity and effectively navigating the challenges posed by a potentially volatile US presidency.

European Security Landscape

With Trump causing the US involvement in the European security architecture to wane, Europe is facing a critical test in securing its landscape across evolving geopolitical conflicts. The Trump administration is likely to withdraw most of the US’ troops out of Europe, significantly weakening the transatlantic security partnership.^[10] This is likely to render Europe to be their own security provider and their primary security actor, with the US only playing a supporting role. Trump’s policies are likely to transform the EU-US relationship to less strategic than it has been, viewing the relationship through a more transactional lens. As US retreats from the region, it becomes even more important for Europe to prevent a power vacuum that creates a fertile ground for external actors like Russia and China to exploit further.

The US is currently Ukraine’s largest military supporter and second-largest financial supporter. Trump with his election slogan “Trump will fix it” has promised to end the war in Ukraine within 24 hours of taking power. Although it is unclear as to how Trump would accelerate the end of the war, however, curtailing any amount of US support for Kyiv would heavily compromise Ukrainian security.^[11] Furthermore, if Trump were to sideline EU in the peace talk with Ukraine, European security is likely to be rendered fragile as Europe is more directly impacted by the conflict.

The Ukraine war has exposed Europe’s security vulnerabilities, and put NATO’s concept of collective territorial defence back on the map. With the extrapolation of the trends from Trump’s first term, it is expected that Trump may slash US defence spending in NATO and even withdraw from NATO altogether. Although Trump has clarified in interviews that he would 100% remain a part of the NATO, however, only as long as the European nations “play fair” and “do not take advantage of American support”, he has consistently questioned US expenditure in NATO, expecting a rapid increase in European military spending.^[12] The Trump administration is also likely to promote a ‘Dormant NATO’ Strategy, encouraging no further enlargement of the NATO as they see additional allies as an increase in burden to the US. Trump reducing US presence and involvement in NATO could further impact European as well as Ukrainian security under the pretext of further Russian aggression.

With this state of dependency, it becomes necessary for Europe to assume a stronger and more independent role in the transatlantic alliance, by attempting to build up their own capabilities to sustainably support Ukraine, focusing on creating a European component that has their own military strength as well as political autonomy. The European countries should be in pursuit to take charge of their own security and to navigate a security landscape, where they do not have to rely on Washington. In this context, it becomes important for the European counterparts to pre-emptively bolster the European defence sector alongside building up regional stability and resilience against a second-term Trump presidency.

Conclusion

Trump’s return to the White House is all set to spark tension and trouble in Europe with multifaceted fears. If Trump’s worst impulses are acted upon, Europe stands to be considerably weakened. However, paradoxically, Trump’s policies could push Europe to reform and strengthen its defence and security capabilities along with economic as well as energy interdependence. As France and UK are sending troops to Ukraine, Europe appears to be demonstrating that it can be more self-reliant in military matters. With enacted or expected rise in defence spending across Europe in 2025, notably from Poland and the Baltic nations, the continent is also strengthening the European pillar of NATO as well as of the transatlantic security alliance.

If Europe’s economic conditions do not reverse soon, the capitals, with their borrowing costs inching upwards and beyond, are looking towards a situation like the Greek debt crisis of 2010. To ensure that the structural underperformance of the European economy against a booming tech-fueled and energy-driven US is tackled, and the European economy is brought back on track, some tough political decisions must be taken. With big stakes for Europe over the next few months, there is a need for Europe to vastly increase investments and reform its industrial policy. In addition, there are other trade relationships, supply-chains, and export destinations, towards which Europeans must diversify their trade away from the US. Navigating the future of Europe across a second Trump administration could spell trouble, or prove to be Europe’s Trump card in 2025, depending on how the European capitals tackle the developments from across the Atlantic. The ball is in Europe’s court.

Endnotes

^[1] Jana Puglierin, ‘Taking the Pulse: This Year’s Good and the Coming Bad and Ugly’, Strategic Europe: Carnegie, December 19, 2024. https://carnegieendowment.org/europe/strategic-europe/2024/12/taking-the-pulse-this-years-good-and-the-coming-bad-and-ugly?lang=en [3]
^[2] Pepijn Bergsen, Antony Froggatt, Veerle Nouwens & Raffaello Pantucci, ‘China and the Transatlantic Relationship’, Chatham House Briefing, September 7, 2022. https://www.chathamhouse.org/2022/06/china-and-transatlantic-relationship/summary [4]
^[3] Thorsten Benner, Jakob Hensing, & Florian Klumpp, ‘Europe is Ready to Team Up on China- If Trump is’, Foreign Policy, December 20, 2024. https://foreignpolicy.com/2024/12/20/europe-eu-trump-trade-von-der-leyen-china/ [5]
^[4] Matthhew Karnitschnig, ‘Europe’s Economic Apocalypse is Now’, POLITICO, December 19, 2024. https://www.politico.eu/article/europe-economic-apocalypse/ [6]
^[5] Ibid.
^[6] Patricia Cohen, ‘Europe Braces for Trump: ‘Worst Economic Nightmare has Come True’, The New York Times, November 10, 2024. https://www.nytimes.com/2024/11/12/business/economy/europe-economy-donald-trump.html [7]
^[7] José Manuel Barroso, ‘Europe is Facing a Triple Crisis- Trump’s Reelection is the Shock Therapy it Needs’, Chatham House, December 9, 2024. https://www.chathamhouse.org/publications/the-world-today/2024-12/europe-facing-triple-crisis-trumps-re-election-shock-therapy [8]
^[8] Ignacio García Bercero, Petros C. Mavroidis & André Sapir, ‘How the European Union Should Respond to Trump’s Tariffs’, Bruegel, December 9, 2024. https://www.bruegel.org/policy-brief/how-european-union-should-respond-trumps-tariffs [9]
^[9] Marc Pierini, ‘Getting Europe Ready for a Second Trump Administration’, Carnegie Endowment for International Peace’, November 14, 2024. https://carnegieendowment.org/emissary/2024/11/europe-trump-second-term-ukraine-nato-migration?lang=en [10]
^[10] Engjellushe Morina, ‘America First, Europe Next: Trump Will Change Dynamics in Western Balkan Security’, European Council on Foreign Relations, December 12, 2024. https://ecfr.eu/article/america-first-europe-next-trump-will-change-dynamics-in-western-balkan-security/ [11]
^[11] Joan Villoslada, ‘What Would Donald Trump’s Victory Mean for the EU?’, Do Better- Global Agenda, October 31, 2024. https://www.vifindia.org/article/2024/november/19/Trump-2-0-The-Impact-of-Donald-Trump-s-Victory-on-the-European-Security-Architecture [12]
^[12] Mathew Burrows, ‘Could Trump Be Good for Europe?’, Stimson Policy Memo: Security and Strategy, September 27, 2024. https://www.stimson.org/2024/could-trump-be-good-for-europe/ [13]

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