Trump-Proofing Europe Looks Impossible
Geopolitical risk is the big unknown threatening France and Germany.
A scene unlikely to be repeated if there’s a second Trump term.
Photographer: Bloomberg/BloombergNothing is certain except death and taxes. The latter is on everyone’s mind in Europe, where France is embarking on an eye-watering round of belt-tightening worth €60 billion ($66.4 billion) to repair public finances. Italy is eyeing fresh levies on corporate profits and oil major TotalEnergies SA is criticizing UK tax plans. The effect will be bad for big firms and a dampener on growth, though hardly existential, at least in France, where it equates to an eight-point rise in the corporate-tax rate to around 33%.
The bigger risk, arguably, is geopolitics (as the chart below suggests). Real wars and trade wars are heating up: Nearly 3,000 trade-restricting measures were imposed in 2023, an almost threefold increase since 2019. More could be on the way if Donald Trump wins US elections and delivers on his threat of tariffs galore. This is the shoe that has yet to drop for the European economy — which is more trade-reliant than the US or China — and its biggest firms as they exit the inflation shock.