Trump 2.0: European businesses brace for what’s next

Europe faces a complex landscape as Donald Trump returns to the White House, bringing both perceived challenges and opportunities depending on who you’re talking to and which media you read.

For many working in the sustainability sector perhaps the biggest potential impact is his influence on global decarbonisation efforts. The President is expected to bring significant rollbacks on climate policies, with a focus on expanding fossil fuel production.

On his first day in office he vowed to quit the Paris climate accord and announced he would expand oil and gas exploration. "We will bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world," he told the audience at his inaugural address, adding "we will drill, baby, drill!".

Before coming into office Trump had already hinted at dismantling renewable energy subsidies and scaling back environmental regulations to favour industries like coal and oil. This shift could present headwinds for European startups focused on sustainability, as diminished global pressure for green initiatives might reduce investment opportunities and slow policy-driven demand for sustainable innovations.

Trump also announced in his address that he was overturning Biden's non-binding goal for the U.S to have an 50% electric vehicles target for 2030,.

New tariffs on imports

There are fears in Europe that Trump’s pledge to impose 10 percent to 20 percent tariffs on imports, particularly targeting Germany's car industry, will disrupt trade dynamics. The German auto sector, already under pressure, risks losing production facilities to the U.S., potentially causing significant job losses across Europe.

According to Euronews, the ripple effects are already visible, with European carmakers experiencing stock market declines amidst global trade uncertainty. The National Institute of Economic and Social Research (NIESR) has also warned that these tariffs could halve the UK’s growth rate by 2025, as reported by Reuters.

Changes for the energy sector

Energy dynamics in Europe are also poised for disruption. Following the cessation of Russian gas supplies due to the Ukraine war, Trump’s policies could further deepen the EU's reliance on U.S. liquefied natural gas (LNG). European Commission President Ursula von der Leyen has proposed replacing Russian LNG imports with those from the U.S., aligning with Trump’s “drill, baby, drill” strategy.

Trump has made his intentions clear on his Truth Social platform, stating, "The EU must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!"

This dependency risks delaying Europe’s renewable energy transition while handing the U.S. greater influence over global energy markets, Euronews writes.

More inflation?

Inflationary pressures are another significant concern. A trade war between the U.S. and the rest of the world is likely to push import costs higher, ultimately burdening European consumers with a fresh cost-of-living crisis.

As France 24 highlights, a weakened euro could further exacerbate these challenges, making imported goods and energy more expensive. Trump’s pledge to end the Ukraine-Russia war within 24 hours, though logistically improbable, adds another layer of uncertainty, particularly in how it might influence oil prices. Whether through sanctions or a relaxation of restrictions on Russian energy, Europe’s energy costs remain heavily tied to the outcomes of Trump’s foreign policy maneuvers.

Trump and the tech elite

Trump’s growing alliance with tech moguls like Elon Musk and Mark Zuckerberg is also raising alarm bells for Europe’s digital sovereignty. As BBC reports, Musk and Zuckerberg have aligned themselves closely with Trump, threatening EU regulations designed to protect user privacy and combat disinformation. Zuckerberg, for example, has abandoned Facebook’s fact-checking programs, introducing voluntary “community note” systems and signaling a potential rollback of safeguards in Europe.

Analysts also warn that this trio could dismantle the EU's stringent digital rules, with Musk leveraging platforms like X to promote far-right agendas in European politics. The Financial Times has reported that some EU investigations into tech giants may even be reassessed under mounting political pressure.

Cautious optimism, less regulation?

However, not everyone in Europe is concerned. Some European tech firms and venture capitalists view Trump’s policies as an opportunity rather than a threat.

For instance, at the Web Summit in Lisbon last autumn, several European startups took part in panel discussions where they expressed cautious optimism about the potential for a more laissez-faire regulatory environment under Trump, particularly in sectors like AI and blockchain.

Deutsche Welle reported at the time that while concerns exist about American dominance and investment disparities, there is hope that Europe can lead in developing trustworthy AI through strong regulations, despite challenges in attracting capital.

European politicians remain divided

Some European leaders have been calling for unity as the region braces for challenges under Donald Trump. French Prime Minister François Bayrou warned that without a united front, Europe risks being "crushed" by America’s growing dominance in global industry and investment. Italian lawmaker Brando Benifei echoed these concerns, telling France 24, “They simply want power and money to buy information and influence. But that’s not democratic balance, and we do not want that in Europe."

However Trump has garnered political support in Europe, notably from Hungarian Prime Minister Viktor Orbán, who declared that Trump’s presidency would help European patriots "occupy" Brussels. Right-wing opposition leaders who flew to the US for the inauguration include Nigel Farage (UK Reform Party), Tino Chrupalla (Germany’s AfD), and Tom Van Grieken (Belgium’s Vlaams Belang), according to The Independent.