Ten days after Donald Trump was elected president, the impact on the global and the European economy is still hard to predict. What prevails is uncertainty about Trump’s economic agenda once he enters the White House. What will “America First” mean in practice? To what degree will he be a protectionist, and will his protectionism only be directed toward China and Mexico (and not toward Europe)? Will he spark a trade war, or will he focus on trade enforcement in line with WTO principles? Will he be able to stimulate the U.S. economy, and how is he going to pay for it? What role will the Republican Congress play? These are some of the questions you hear a lot these days on this side of the Atlantic.
Transatlantic trade and investment flows are the backbone of our economies. The transatlantic economy accounts for 47 percent of global GDP and one-third of global trade. Each year, U.S. companies sell goods and services worth $500 billion to Europe, thus sustaining and creating jobs in the U.S. Over 5,000 German companies are invested in the U.S. and do business there. Even a marginal decline in transatlantic trade and investment would have immediate negative effects for jobs. Likewise, improving our economic relationship, for example, through the Transatlantic Trade and Investment Partnership (TTIP), would create additional jobs and growth.
It is hard to say how Donald Trump will govern with regard to Europe and the transatlantic economy. Looking at the election results, it is obvious that the Trump vote is at least in part an anti-globalization vote. This should worry Europeans: If Donald Trump retreats from globalization and free trade, he could claim a mandate to do so. Trade was a prominent issue in the campaign. It is no accident that Trump won states such as Ohio and Pennsylvania where manufacturing jobs have been lost in recent decades. An anti-trade agenda has real roots in American society.
Yet anti-establishment and anti-globalization voices can be heard loud and clear across Europe as well. Donald Trump’s election might not be an isolated event but could rather illustrate a trend prevalent in the West. This means that the U.S. election does not primarily reflect a rift between the transatlantic partners but rather a rift within our societies. Those who want an open society based on global engagement need to work for it by developing a convincing and inclusive message. The growing concerns and anxieties regarding globalization have been underestimated for much too long.
Fabian Wendenburg is the Deputy Head of Department for External Economic Policy at the Federation for German Industries. He is a participant in AICGS’ project “A German-American Dialogue of the Next Generation: Global Responsibility, Joint Engagement.” The opinions expressed in this article are the author’s own and do not necessarily reflect the view of any organization with which he is associated.
This blog post is sponsored by the Transatlantik-Programm der Bundesrepublik Deutschland aus Mitteln des European Recovery Program (ERP) des Bundesministeriums für Wirtschaft und Energie (BMWi).