ifo President Fuest: Europe Must Invest in Its Own Strength
Europeans should do more for their own economic strength. This is ifo President Clemens Fuest’s recommendation in view of the elections in Europe and the United States. “If Europe’s security and prosperity depend primarily on the outcome of US presidential elections, then we have made some fundamental mistakes,” he writes in a new ifo Viewpoint. Achieving greater strength should be the central theme of the European elections in June 2024 and the policy of the next European Commission. This includes defending the rules-based international order with partners wherever possible.
Europe need not worry too much about the import tariffs announced by a possible Trump administration. While it is true that exports from Europe would also be affected this time, Trump will also cut taxes again and drive up public debt. As a result, US interest rates will rise and the US dollar will appreciate. This in turn will trigger a US import pull. “Europeans can therefore hope that their exports to the US will continue,” Fuest says.
Nevertheless, the EU must prepare itself for the protectionism of a Trump administration and conclude as many trade agreements as possible with other countries and regions; for example, finally reaching an agreement with the Mercosur states. Europe also needs a China strategy, as it must expect pressure from the US to further restrict economic relations with China. This would particularly affect Germany, which is more involved in China than other countries are.
