Trump Tornado in Europe

Trump Tornado has caused devastation not just in America, but also in Europe; with European Union fending for herself over two things: Tariff and Defence. In fact, Europe is all worked up over these two issues these days.

First, the Defence.

Soon after Donald Trump took over as the President of the United States for the second term, Europe’s natural ally for the last over one century, strong message came from both Trump as well as his Vice President that European Union needed to increase its Defence Budget, and that Europe has to pay for its own defence.

Trump made it clear that Europe would have to pay for its own defence and even NATO will not guarantee free defence support. There even ran a debate in the U.S. over the issue of the U.S. staying in NATO, and important people like tech-billionaire Elon Musk supported the idea of the U.S. possible pulling out from NATO.

In fact, earlier on too, many US presidents including President Barack Obama, had expressed concern about European over-reliance on American deterrence in recent decades, and asked their European allies to spend more on their armies. But they kept going because they thought it as a rule that the U.S. placed itself as the world leader across political divides.

Trump, however, wants to focus the U.S. attention on two things—countering China in trade and setting things right at home.

At present, a sizable number of U.S. military personnel are deployed in different countries of Europe to provide security.

According to a data provided by the U.S. Defence Department in June 2024, a huge 100,000 US troops stationed in Europe. North Atlantic Treaty Organisation (NATO), a defence co-operation agreement between the U.S. and Europe, is still in place, though a lot of debate in the U.S. is going on over NATO’s relevance.

Europe today feels that it has to stand on its own over its security and should not be dependent so much on the United States. Exigency of this is being felt much today also because the U.S. is shifting its relations with its traditional foe, Russia.

According to the European Defence Agency, the EU from its earlier spending of around €279 billion, which is 1.6% of its GDP; has in 2024 spent €326 billion—which was 1.9% of the EU GDP.

According to reports from various sources, Europe could need 300,000 more troops and an annual defence spending hike of at least €250 billion in the face of possible Russian aggression in future.

The Debt Problem

Many nations in Europe are in severe debts. In 2024, the government gross debt to Europe’s GDP, stood at 81.6 per cent.

In nations like Belgium, Portugal, Spain, Greece, France and Italy, the government gross debt to nations GDP is more than 100 per cent. In nations like Germany (61%), Croatia (60), Cyprus (70), Austria (80), Finland (80), Slovenia (69), Slovakia (60) and a few more, government debt to GDP ration is pretty high.

Amidst this situation, Europe has to arrange for more defence spending, which only means more borrowing. Some leaders have even said that more borrowing for defence would be justified. ‘A temporary exemption of budget rules for additional defence spending is justifiable,’ said Dutch central bank chief Klass Knot a few days back. ‘But the exemption should really be temporary as public debt levels in the EU are still too high,’Knot rushed to add, highlighting the pitfalls the need for more borrowing as well as its pitfalls.

More borrowing from banks by European nations, threatens to engulf Europe with acute debt and inflation, as many leaders and bankers like Knot have already sounded the bell for.

Added to more borrowings from the banks is the Trump tariff which has seriously impacted European economy—which is being discussed in the later paragraphs at length.  

For long, Europe had been the centre of things. It was the axis that balanced the power-politics of the world. Theories like white-man’s burden brought to the world not just civilization but modern philosophies of politics, economics and many other things. Europe was looked upon as the centre for modern culture and thought. Though power and economy shifted to the United States of America after World War II, Europe continued to hold on to its intellectual and philosophical superior place in the world.

Trump Tornado has, for once, shaken up Europe. Not just on defence but also on economy—due to tariff.

U.S. President Trump would be remembered in modern European history as a dismantler of the post-war global order and a mover and shaker of Europe too.

Trump Tariff

Trump has already put in place a 25 per cent tariff on all steel and aluminium products, impact of which is being severely felt by Europe too, nations like Mexico, Canada, South Korean, China being the others. In fact, Trump is mulling a 25 per cent tariff on all European imports, a case which will leave Europe in a more difficult situation.

Many European nations have profitable mutual trade with the United States, and they enjoy trade surplus.

Like for Britain, the U.S. is the single largest market for Britain’s exports, ranging from the most sophisticated components in US navy submarines to artisan scented candles. In 2024, export-import between Britain and U.S. stood at £294bn, of which Britain enjoyed a trade surplus of £70bn. Companies of the United States were huge investors in Britain stock.

Similarly, the mutual trade between the U.S. and France in 2023, stood at $153bn, in which trade surplus for France was around $ 17bn.

For Germany, the trade surplus in its trade with the U.S. was $72bn in 2024 amidst a mutual trade worth $250 bn annually.

Thus, in a way, the United States have been offering a profitable foreign market for many European nations. The United States too, has been offering Europe security.

According to available figures, in 2014 the surplus of Europe with the United States was about €100bn. By 2024, this has grown roughly upto €200bn.

Minus the United States, Europe will feel that something is moving away.

German car makers are facing tough fight from China’s cost-effective cars.

Thus, the already struggling Europe economy is set for a difficult situation after twin Trump Tornado— the Defence and Tariff.  

In the changed circumstances, Europe may have to ponder to look away from the United States for both defence alliance as well as trade partnership—which certainly is going to be a tough task.