Will Donald Trump’s resounding election be the shock Europe and its economy have been waiting for? This question was the basis of the debates on the competitiveness of the Old Continent, on Wednesday 13 November, at the Collège de France, and in particular the final debate in which Emmanuel Macron and Mario Draghi took part.
The former president of the European Central Bank, author of a recent report aimed at stopping Europe’s disconnection from the United States and China, believes in the urgent need to “we are together” in the face of the announced hardening of American politics, including the more systematic use of qualified majority decisions within the Twenty-Seven.
“We must protect our market”
Also for Emmanuel Macron, the victory of the Republican candidate risks widening a technological and economic gap that had begun to widen at the turn of the nineties and which was aggravated, under the Biden administration, by the IRA (Inflation Reduction Act). “one of the most protectionist packages we have seen for green technology”. According to the Head of State, we must expect the continuation of a policy on the other side of the Atlantic «pro-innovation»to deregulation “uninhibited”ha “a tariff tension that will be higher”.
Specifically, Emmanuel Macron deplores a form of European naivety: “We have to protect our market. This is not protectionism, but when we have economies like China which, for ten years, has oversubsidized certain segments of its economy and dumped its excess capacity on our continent, (it’s about) restore the rules of fair competition. » And the President of the Republic is happy that Europeans are starting to do so “take it on”as demonstrated by the introduction of surcharges on Chinese vehicles.
Develop targeted industrial policies
To take on Trump-era America as well as China that has also done so “has decided to no longer respect WTO rules”Europeans must remain united, insists Emmanuel Macron, and exert the full weight of their 430 million inhabitants. “Europe’s strength is its single market. »
A market which in the future, he claims, will have to fully integrate sectors such as telecommunications or energy, to encourage the emergence of champions at a continental level. A market that must also include that of capital so that the savings of Europeans, two-three times higher than those of Americans, are invested more massively in innovative projects and research in the sectors in which the global technological battle is being fought.
The President of the Republic believes that Europe must assume responsibility for the implementation of industrial policies without relying exclusively on market forces. It has done so in the hydrogen, electric batteries or semiconductor sectors, through important projects of common European interest (PIIEC). He will have to do it in other areas too, without hesitation.
One or two European champions per sector
“We want to say that we want one or two European champions, for example in the quantum sector or in artificial intelligence, for example in cyber, cites as an example. There is a European agency that selects ten projects independently with the best academic experts. We start from the assumption that perhaps there will be a significant attrition rate and that there will be a champion who will survive and who will be a great European champion. And maybe it will be in Poland, and it will not be serious for France and Germany. »
And Emmanuel Macron judges the current European model obsolete: “We build rockets – it’s the same thing for missiles – by passing the components six to ten times across the border to make sure that there are many hours of work in Spain, many hours in Germany, many hours in France… When on the other On the other hand, you have someone who tells you: “I’m revolutionizing all the production models and where factories in four different locations were needed, I’ll do it in a garage”, he said, broadly summing up Elon Musk’s approach.
The risk of division
For Emmanuel Macron, as for Mario Draghi, there is urgency. “We can no longer take nineteen months to pass legislation. And we shouldn’t have laws for everything,” pleads the one who was also Prime Minister in Italy. If a result is not reached within eighteen months, warns Emmanuel Macron, the risk of seeing some European states negotiate bilaterally with Washington or Beijing is great.
Many arguments to accelerate the possible implementation of the recommendations of the Draghi report, which also envisages making decarbonisation a source of growth. However, with the need to inject 800 billion euros per year. The former head of the ECB and the French president agree: it is a sustainable effort provided that it is shared halfway between public and private.
Interview: The Future of Europe’s Economy Post-Trump: Insights from an Expert
Time.news Editor (T.N.E.): Welcome, Dr. Elena Richter, an esteemed economist and expert on European economic policy. Thank you for joining us today to discuss the implications of a potential Donald Trump victory on Europe’s economy.
Dr. Elena Richter (D.E.R.): Thank you for having me! It’s a pleasure to be here.
T.N.E.: Let’s dive right in. The recent debate at the Collège de France featured significant voices, including Emmanuel Macron and Mario Draghi, discussing Europe’s competitiveness in light of a Trump presidency. How do you believe a Trump victory could change the dynamics between Europe and the U.S.?
D.E.R.: A Trump victory would likely exacerbate existing tensions, particularly in trade and technology. Macron’s warning about the widening technological and economic gap is crucial. A more protectionist U.S. policy, similar to the Inflation Reduction Act, could lead Europe to rethink its strategies for competitiveness, especially in green technologies.
T.N.E.: Macron emphasized the idea of “protecting our market.” Can you elaborate on what he means when he says that this isn’t about protectionism, but restoring fair competition?
D.E.R.: Absolutely. Macron is pointing to an essential reality: Many economies, particularly China’s, have engaged in practices like over-subsidization and dumping. In this context, safeguarding Europe’s market becomes vital for ensuring fair competition. It’s about establishing rules that prevent unfair advantages in global markets, and it’s a strategy aimed not only at protecting European interests but also at fostering a healthier competitive environment.
T.N.E.: The conversation around industrial policy is also coming into play. Macron argues that Europe cannot depend solely on market forces. What kind of industrial policies should Europe implement to enhance its competitiveness?
D.E.R.: Macron’s call for targeted industrial policies is about strategic investment in key sectors such as hydrogen, electric batteries, and semiconductors. Europe needs to embrace a more active role in shaping its economic landscape, promoting innovation through coordinated efforts rather than leaving it entirely to market actors. This could involve public-private partnerships and substantial funding for research and development in critical areas.
T.N.E.: You mentioned the necessity of creating “one or two European champions” in emerging fields like quantum computing and artificial intelligence. How feasible is that goal?
D.E.R.: It’s a challenging but necessary goal. Europe has the talent and resources to become a leader in these fields, yet it requires a unified approach and significant investment. The establishment of selection bodies, as proposed by Macron, to foster promising projects is a crucial step. It’s about prioritizing the right initiatives and allocating funds effectively to ensure that these emerging champions can compete globally.
T.N.E.: Macron also pointed out the importance of integrating sectors like telecommunications and energy. Why is this integration essential for Europe’s competitive future?
D.E.R.: Integration is vital as it can lead to economies of scale and improved efficiency. A unified approach in telecommunications and energy, for instance, will not only empower European companies to compete on a larger scale but also ensure that technological advancements benefit the entire continent. Moreover, it can foster innovation and collaboration, ultimately creating a more robust economic landscape.
T.N.E.: As we look ahead, what steps should Europe take now to prepare for possible changes under a Trump administration?
D.E.R.: Europe must rally its 430 million inhabitants around a common vision and shared goals. It’s essential to boost investment in research and development, strengthen protections against unfair competition, and pursue strategic collaborations across member states. By presenting a united front, Europe can better navigate the complexities of the international landscape, regardless of who occupies the White House.
T.N.E.: Thank you, Dr. Richter. Your insights on these critical issues are invaluable as Europe navigates this uncertain yet pivotal time in its economic journey.
D.E.R.: Thank you for having me! It was a pleasure to share my thoughts.