Sunday, 16 March 2025
The economic policies outlined by newly inaugurated U.S. President Donald Trump are expected to increase pressure on Europe, particularly in areas such as environmental regulations and trade policies. However, analysts suggest that Trump’s approach, while aggressive, leaves room for future negotiations with European partners.
According to economists interviewed, the most significant impact is anticipated in the realm of environmental policy, where the European Union loses a key ally in its Green Deal agenda. Analysts warn that this shift could compel European policymakers to reconsider their sustainability goals. Meanwhile, Trump’s support for increased energy production is likely to drive down global energy prices, benefiting consumers but challenging the EU’s green transition efforts.
Green Policies in Jeopardy as U.S. Shifts Focus
One of Trump’s key economic promises involves rolling back environmental regulations and cutting support for electromobility. “The EU has lost a crucial partner in its green initiatives. The question now is how long the European leadership can sustain green policies that, while beneficial for the environment, have been a drag on economic growth,” said Pavel Peterka, chief economist at XTB.
Vít Hradil, chief economist at Cyrrus, echoed these concerns, noting that Trump’s expected departure from environmental commitments could hurt Europe’s competitiveness. “The EU is likely to maintain strict green regulations, which could further widen the gap in economic growth compared to other regions,” he added.
Energy Prices Set to Fall with Increased U.S. Production
Trump’s emphasis on boosting domestic production, particularly in oil and gas, is expected to lower energy costs worldwide and curb inflation in the U.S. “Trump aims to increase energy exports globally to strengthen the U.S. economy,” said Peterka.
Radim Dohnal, an analyst at Capitalinked.com, noted that while an increase in U.S. production could put downward pressure on prices in Europe, the decline may be tempered by Trump’s plan to expand U.S. strategic reserves. “Energy prices may drop, but the effect could be limited by increased stockpiling,” Dohnal said.
Trade Policies: Tariffs as a Bargaining Tool
Another cornerstone of Trump’s economic strategy is a potential shift in trade policy, which could include the introduction of tariffs. Analysts believe that such tariffs could serve a dual purpose—generating revenue for the U.S. budget and acting as leverage in trade negotiations.
“Trump did not specify any tariffs during his inaugural speech, which suggests they may not be an immediate priority,” said Petr Bartoň, an analyst at Natland. He added that while broad tariffs could be imposed on Europe, they are more likely to be used as a negotiating tool rather than an outright policy. Bartoň also warned that tariffs typically result in higher costs for domestic consumers, stating, “Tariffs inevitably impact the citizens of the country that imposes them, as they directly increase prices.”
Inflation Control and Its Global Impact
Trump’s focus on inflation reduction could also have consequences beyond the U.S., particularly for the Czech Republic in its election year. “Trump identified rising energy prices and government deficit spending as key drivers of inflation, a stance that could influence political debates in the Czech Republic,” Bartoň explained. Czech political parties are expected to use this argument in their campaigns to highlight the impact of government fiscal policies.
Panama Canal Concerns and Potential Trade Disruptions
Trump’s announcement that he intends to assert greater U.S. control over the Panama Canal has raised concerns about potential disruptions to global trade. Analysts warn that such a move could lead to temporary inflationary pressures worldwide.
Technology Sector Prioritized Over Traditional Industries
In a notable departure from previous inaugurations, Trump’s inaugural event prominently featured representatives from major global technology companies rather than industrial leaders. Dohnal pointed out that this reflects a shift in priorities and presents an opportunity for Europe to strengthen its technological standing. “Europe stands a better chance of catching up with the U.S. in technology rather than in energy-intensive sectors,” he noted.
Source: CTK
