A Week That Will Put Europe in a More Difficult Spot: Many Strategies Need Rethinking  

C-MACC Sunday Theme and Weekly Recap

A Week That Will Put Europe in a More Difficult Spot: Many Strategies Need Rethinking  

• Will the new administration play the NATO “Trump” card to gain significant leverage over Europe? This seems likely to us. The EU trade surplus with the US could shrink, and European defense spending will need to rise.
• With increased defense spending, Europe will have a lot less to spend on energy transition and on rescue packages for globally uncompetitive industries, some of which are now more critical for national security.
• It is possible that we will quickly get a shift from actions to try to prevent climate change to actions focused on dealing with climate change, especially in Europe where the funding for transition could dry up quickly.
• Alternatively, the new US Administration would need to back down on 3 fronts versus pre-election promises; stay in the Paris accord and keep incentives, reassure unconditional NATO support, and back down on trade!
• Otherwise, we look again at the huge competitive advantage in the US, some very mixed corporate fortunes, what COP29 does with hydrogen, and climate change casualties.

Exhibit 1: Europe enjoys a trade surplus with the US. The jump in 2022 and 2023 in both imports and exports is largely price-driven after the Ukraine invasion, but US hydrocarbon exports to Europe have risen significantly since then.

Source: Eurostat

See the PDF below for all charts, tables, and diagrams