European politicians and policymakers are busy preparing for more American protectionism, no matter who emerges as the following head of the White House after next week's election.
The presidential race has remained a dead heat in recent days, with polls consistently showing the candidates, Vice President Kamala Harris and former President Donald Trump, tied in key battleground states and across the country.
“Whoever wins will be 'America first,'” a senior European diplomat, who didn’t need to be identified due to sensitive nature of the transatlantic relationship, told CNBC last week.
“The main concern of Americans is the economy, and the answer has to be more economic nationalism – I don't agree with that, but I don't see a way out of it,” said the senior diplomat, who’s collaborating in confidential talks between EU leaders.
The comments come after a warning from German Finance Minister Christian Lindner, who told CNBC on Friday that there could possibly be retaliation if the U.S. starts a trade war with the European Union.
“In this case, we need diplomatic efforts to convince everyone who enters the White House that it is not in the best interests of the United States to have a trade conflict with them.” [the] European Union,” he said on the IMF annual meeting in Washington, DC
Trade with the United States is amazingly necessary to European nations. The EU and the USA have this largest bilateral trade and investment relationship on this planetwhich reached an all-time high of 1.2 trillion euros ($1.29 trillion) in 2021, based on the European Commission, the EU's executive body.
Harris is predicted to proceed to some extent President Joe Biden's policies, remembered in economic terms in Europe by the Inflation Reduction Act – a sweeping US law value $369 billion , which targets climate and energy policy. The IRA angered many European leaders resulting from its protectionist nature.
The “America First” policy is prone to have a greater impact on European economies under a Republican presidency. Trump has threatened to impose additional blanket tariffs of 10% on European products, which could weigh on the bloc's exporters and weaken them, based on data from Goldman Sachs the euro by as much as 10%.
Trump's first term within the White House was a difficult time for some European leaders, who expressed distaste for the previous president's style and confrontational tone. The two sides often had different views on trade, defense and technology, amongst other issues.
“Trump can't surprise us anymore, we know how to deal with it, we've had to deal with him before,” the anonymous senior diplomat also told CNBC.
A second EU official, who also asked to not be named resulting from the sensitive nature of U.S. relations, told CNBC: “There is no panic. We are very pragmatic, but of course we have to prepare for both scenarios.”
The same official added that the European Commission is working on “bold” initiatives no matter who becomes the following president.
CNBC reported in May 2023 that European officials were already quietly preparing for the potential of Trump's return. This meant specializing in reducing dependencies on the US and China – something EU leaders proceed to strive for.
In an October statement, the EU's 27 heads of state called for “more efforts to improve the Union's competitiveness, strengthen its economic resilience, ensure its industrial renewal and realize the full potential of the internal market.”
“It underlines the urgency of taking effective action,” the statement continued.
Champagne to have fun?
Apart from the European institutions in Brussels, there’s some disagreement in the assorted EU capitals regarding the US presidency. National leaders expressed various opinions about the potential of a second Trump presidency.
Hungary's Prime Minister Viktor Orban reportedly said this to journalists in Brussels This month he revealed he would open “several bottles of champagne” when Trump returns to the White House. Just two days after U.S. voters go to the polls, EU leaders are expected to satisfy within the Hungarian capital Budapest and certain discuss the election final result over dinner.
A 3rd EU official, who didn’t need to be named and shall be attending the meetings in Budapest, told CNBC: “I definitely won't celebrate if Trump wins.” The same official added that the U.S. election was “very worrying “is because it “amounts to 200 votes”. [swing state] Pennsylvania.”
The official added that whatever the final result, “it will not be a shock like last time, and Europe has since improved its strategic autonomy and defense spending.”
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