Europe concerned about the potential economic impact if Trump returns to the White House

Coin World Report:
European Central Bank (ECB) presidents are losing sleep over the possibility of Donald Trump returning to the White House. Fear is evident. Trump’s radical trade policies, particularly his love for tariffs, could potentially cause their already fragile economies to collapse.
With Africa still plagued by inflation and slow economic growth, a second Trump administration could further complicate matters.
Investors remain highly vigilant, and analysts suggest that Trump’s return could push the euro down to parity with the US dollar. Europe cannot afford another economic blow.
The European economy is already in dire straits.
Trump promised to impose 60% tariffs on Chinese goods and up to 20% tariffs on all other goods. If he sticks to his guns, this would result in the largest trade disruption since the Smoot-Hawley Tariff Act of the 1930s, which exacerbated the Great Depression.
These measures could deal a heavy blow to Europe. The eurozone’s position is much weaker now compared to Trump’s last term in office from 2017 to 2021. This time, Europe cannot handle it.
Officials in Frankfurt, London, and Stockholm have been discussing the chaos that a Trump reelection could bring, according to insiders.
This week, as they gathered in Washington for the International Monetary Fund (IMF) meetings, they were particularly nervous.
The situation in Europe is much worse than in 2017 when Europe was not dealing with wars in Ukraine or the Middle East.
The eurozone has just reported its best annual growth in a decade, while the UK has had its strongest year since 2014. In comparison to today: the UK’s growth is stagnating, and Germany is heading for a second consecutive year of annual contraction.
French businesses and households are facing €60 billion ($65 billion) in spending cuts and tax increases. Business surveys across Europe are bleak, leading the ECB to have to revise its interest rate plan to mitigate the impact.
Central banks around the world are on high alert.
In January of this year, ECB President Christine Lagarde also warned that Trump’s trade policies were a major concern.
Officials invited Goldman Sachs Chief Economist Jan Hatzius to discuss the impact of tariffs at a symposium in Sintra, Portugal, this summer.
These concerns remain at the forefront. Lagarde stated last week, “Any restriction, any uncertainty, any trade impediment is important for an economy like Europe’s.”
She added that any measures that increase trade barriers, including tariffs, will undoubtedly harm the European economy. Bank of England Governor Andrew Bailey has taken a more cautious approach.
He stated in August that the bank is “obviously interested in the outcome of the US election,” but will not speculate on what might happen.
While most central bank presidents are trying to remain neutral, some are clearly on edge. Swedish Central Bank Governor Erik Thedeen recently traveled to the US to assess potential impacts.
“You have to be very careful about assuming that what Trump is saying now will actually become policy,” Thedeen said. He added that it is important to see what his economic strategy will be if Trump wins.
Not everyone believes that Trump will follow through on his threats. Some believe that his tariffs may not have as severe an impact on Europe as feared.
However, Thedeen stated that even if Kamala Harris becomes president, a trade-friendly environment is not guaranteed. Her team has privately indicated plans to continue implementing many of Joe Biden’s policies, including tariffs on billions of dollars’ worth of Chinese goods.
The risks are high for Europe. The region’s economic powerhouse, Germany, is particularly vulnerable. With the manufacturing sector already suffering, the last thing Germany needs is another trade war with the US.
Trump’s track record in trade is not reassuring. In his first term, his protectionist policies led to a decline in transatlantic relations. This time, the EU is preparing for the worst-case scenario.