With Donald Trump's return to the White House in January 2025, not only the geopolitical world order but also Europe's economic stability faces new challenges. His first decisions – including the announced withdrawal of the USA from the World Health Organization (WHO) and the renewed demand for higher NATO spending – have unsettled European leadership. But as is often the case with Trump, there is a clear strategy behind the loud threats. For Europe and investors, the time has now come to adjust to a new reality.
Trump and the Art of Pressure: A Familiar Tactic
Donald Trump is a master of negotiation through escalation. His method is simple but effective: He relies on maximum threats to strengthen his position, and then seeks compromise once he has achieved his goals. This pattern was already clearly visible during his first term (2017–2021) and is now emerging again.
Examples from the Past
- NATO Financing: Trump repeatedly threatened a US withdrawal from NATO if European countries did not increase their defense spending. The result? NATO member states' budgets increased, and the USA remained in the alliance. Not only that, but they also increased their troop presence in Europe.
- Trade Conflicts: His tariffs on steel and aluminum led to tensions in 2018, but also to new trade agreements that were advantageous for the USA.
What Does This Mean for 2025?
Perhaps the most important rule with Trump: don't believe that he means what he says, but also don't forget the possibility of a plan in the background. The renewed demands for higher NATO spending and the withdrawal from the WHO might seem like a rupture at first glance. But in the past, Trump has shown that such measures are often just leverage to force concessions. For investors, this means: Short-term volatility is likely, but in the long term the situation could stabilize.
Europe in Focus: Between Independence and Partnership
The transatlantic partnership faces renegotiation. While NATO and trade remain central issues, it is clear that Europe must become more independent – both in defense and economically.
NATO and Defense
Bereit für bessere Investment-Entscheidungen?
Starten Sie noch heute mit Ihrer kostenlosen Testphase - Aktienanalyse mit künstlicher Intelligenz.
Volle Transparenz | Voller Zugriff | Jederzeit kündbar
Trump's demand for defense spending of 5% of gross domestic product (GDP) is unrealistic, but it puts pressure on Europe. Projects such as Permanent Structured Cooperation (PESCO) and the European Defence Fund could promote a stronger European defense union. But so far there is a lack of political will and sufficient funding. Possibly a new determination can be found here through pressure from the USA.
Economic Resilience
Europe's dependence on the USA and other external actors became clear during the Corona pandemic and the Ukraine war. Now is the time for strategic investments:
- Diversification of supply chains: Less dependence on China and the USA.
- Strengthening strategic industries: From semiconductors to renewable energies.
- Promotion of the internal market: Closer economic integration within the EU could cushion external shocks.
What Does This Mean for Investors?
Several scenarios emerge from these developments. Geopolitical uncertainty could lead to market volatility in the short term, particularly in sectors such as defense, technology and energy. But in the long term, the situation also offers opportunities:
- Defense and armaments stocks: Companies that benefit from higher defense spending could gain importance in the coming years.
- Energy and Technology: Europe's efforts to become more independent are likely to promote investments in energy and especially the urgently needed grid infrastructure and key technologies.
The valuation gap between European and American companies, especially the large American companies, is historically high. The pressure for independence combined with the isolation of the USA could be the impulse needed to initiate a long-term trend reversal from a valuation perspective.
A World in Transition
Trump's return to the White House poses new challenges for transatlantic relations and global markets. But as is often the case with Trump: There is more strategy behind the threats than one might think possible. For Europe, the partnership with the USA remains important, but the days of unconditional trust and extreme interweaving are tending to be over.
