3 ways the US elections could change the future of Europe

US election day is fast approaching and presidential candidates Donald Trump and Kamala Harris are embarking on what promises to be a nail-biting race to the finish.

The outcome of the elections is crucial to the future of America and that of the rest of the world, and perhaps especially in Europe.

The old continent has come to rely heavily on the United States for trade and defense guarantees, raising the stakes for the region as it grapples with economic volatility, loss of competitiveness, rising nationalism right-wing and the increased security risks due to the Russian invasion. of Ukraine.

Take Trump, for example. He has made no secret of his ambitions to make European trade more expensive, adding to stock market jitters that the region could become a loser. And Harris could put additional pressure on Europe to move away from China.

Fortune spoke to leading experts ahead of the election to share their analysis of the potential impact on Europe.

1. Crippling prices

The United States is the European Union's main trading partner. Over time, the two countries have established a mammoth trading relationship that employs 16 million people on both sides of the Atlantic and generates billions of dollars in trade and investment. That's not all. Half of European production comes from trade, which is now exposed.

Trump, the Republican candidate, is considering imposing additional border tariffs of 10 to 20 percent, which would make trade costly and could weaken the euro.

Tariffs will seriously hamper EU economic growth, Zach Meyers, deputy director of the Center for European Reform, told Fortune.

This is not a far-fetched result, given that Trump imposed tariffs on steel and aluminum imports from the region during his first term as president. Additional tariffs could hurt economies like Germany, which is struggling and relies heavily on U.S. exports, with its GDP falling by 0.23%, studies show.

Stuart Franklin Getty Images

The prospect of retaliatory measures on more than $350 billion in U.S. exports to Europe means households and businesses would face higher prices, reducing consumers' purchasing power and hurting profits businesses in Europe, said James Knightley, ING's chief international economist.

Brussels is already preparing for how elections and a strict tariff regime could take place.

However, if Europe gains an exemption from Trump's tariff regime, it could boost the relative competitiveness of European companies in the United States, Meyers said.

Tariffs are Trump’s modus operandi. On the other hand, Harris would take a more diplomatic approach and increase pressure on the EU to reassess its economic ties with Beijing. After all, the United States used its diplomatic influence to push Europe before cutting ties with Chinese telecommunications giant Huawei.

Regardless, Meyers expects that the three-way relationship between the United States, China and Europe will likely become more complicated. Harris would encourage European companies to make more products in the United States, continuing the approach of her predecessor, President Joe Biden.

Trump and Harris will likely raise tariffs on China, forcing the Asian superpower to export more to Europe (than it currently does) and increasing the risk of a full-scale trade war, Meyers said.

2. Business uncertainty

Even if tariffs are a way to put America first, as Trump claims, the election could well be the start of an overall change in mood globally.

There is concern that President Trump could make significant changes to both the economic and geopolitical environment, Knightley said. Harris is effectively the continuity candidate and, as such, is seen as less threatening.

Europe's competitiveness gap in technology, innovation and defense has become an existential challenge, as former European Central Bank President Mario Draghi highlighted in September.

Mario Draghi was the former president of the European Central Bank (ECB).

Simon WohlfahrtBloomberg/Getty Images

There are growing concerns that the EU also needs to play a bigger role in AI to avoid a new round of future dependencies, Meyers said. In a recent report he co-authored, Meyers suggests that aligning U.S. and European technology regulations could benefit both countries by improving productivity and trade in technology services.

As Europe attempts to strengthen its position in the fast-paced, cut-throat world of innovation, it has also built a notorious reputation for scrutinizing U.S. big tech companies for their online security and antitrust practices.

Trump recently complained that the EU had fined Apple billions of dollars, promising to take action if he won the election. He has also criticized European regulations in the past.

There is a lot of uncertainty and curiosity about what each candidate could mean for Europe's ability to innovate and regulate. However, the region remains largely responsible for changing its destiny on this subject.

It is actually up to European policy makers to create an environment that allows them to grow and reach the level needed to compete with the big American names. Unfortunately, I'm not sure that will happen, Knightley said.

3. Defense

Geopolitics is another key area where the two candidates' different approaches could impact Europe. Years of low defense investment and the escalation of the war between Russia and Ukraine have left the EU in a position where it needs US support.

In this context, the Trump effect on Europe and the EU will be even more negative than it would be under the Harris administration, Steven Blockmans, a research associate at the Center for European Policy Studies, told Fortune.

Trump has already threatened to leave NATO. He even went so far as to say he would encourage Russia to do whatever it wants toward NATO countries that don't contribute to the alliance, Politico reported earlier this year. If Trump decides to change course on support for Ukraine, European countries will quickly increase their defense spending to strengthen national security.

NATO tactical training in Cincu, Romania.

Alex NicodimAnadolu/Getty Images

Harris said if elected she would support the defense alliance and Ukraine. She is expected to largely follow Biden's foreign relations path with some adjustments of her own.

Blockmans said the big question about a second Trump administration is whether adults will still be in the room when policy decisions are made.

Another risk of a Trump 2.0 is that his power could embolden other far-right European leaders, such as Hungary's Viktor Orbn.

There are very strong autocratic tendencies in Trump's approach, Blockmans said, warning that other factors also influence the popularity of European political figures beyond influence from across the Atlantic.

In 2024-25, Europe and the EU [are] unfortunately, in a more dependent situation in transatlantic relations, and that is why it is even more important that there is stability, predictability and support.

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