“Trump vs EU” can be an opportunity

It seems we are setting up for a clash between the Trump and the EU for two reasons: because the EU’s way of working (slowly, consensus, rules based) is anathema to Trump (it also comes across as less interesting for the media); and because the EU can/should seek to occupy the space which America is leaving due to Trump’s desire to return to the good old days.

Let’s flesh these two out a little more. First of all, Trump is a generally unsuccessful business man whose little success is due to flouting rules. This can work to an extent when you are running a small business but I would argue that it does not work when you are trying to balance the needs of a union of 50 states in America or 27 countries in the EU. Progress will necessarily be slower in the EU due to the need to find a consensus but it is likely to lead to a more permanent lasting results as it takes time for these ideas to become accepted. Secondly, by turning away from clean energy, Diversity, Equity and Inclusion, efficiency and international relations, Trump is leaving a lot of space which the EU can move into and seek to gain a permanent lead over the United States. A shining city upon a hill, if you will.

Here are some things to think about:

First of all, Europe is widely mocked for its obsession with regulations. There are two problems with this: regulations/standards are what makes trading possible between states that wish to trade/compete on equal terms. Each European state gives up some of its sovereignty to allow the rules to work for everyone. Notice the difference to what Trump is proposing where the USA imposes its rules on the rest. The other benefit of regulations/standards being imposed is that, as long as you can trust the governing body, you can trust the decisions they make and purchase the product with a reasonable degree of certainty that it will work. When you can’t, you can’t.

And you get a situation like Boeing/Airbus where the US regulator, the FAA, is to my mind losing all credibility to the extent that you wouldn’t fly/buy Boeing out of choice. Indeed, following the various 737 MAX debacles, the local regulators stopped accepting FAA assurances on the flight-worthiness of the 737. Here’s a future scenario to think about. What is RFK Jr going to do to the FDA? Because if he makes the FDA truly ineffective and consumers/countries start to not trust drugs which have been approved in America, then Europe suddenly has regulatory primacy. Which means a lot of money/business moves here because rather being first approved by the USA and then exported around the world, the drugs first get approved by the EU and then exported around the world because the world doesn’t trust America. The same could happen with cars. Trump is rolling back efficiency standards in America.  Which is great in the short term until you find 3-4 years down the line that no-one wants to buy an American car anymore because they are so woeful. And Americans suddenly wake up and only buy foreign made cars because they are so much more efficient that it doesn’t make sense to buy an American one.

The EU should make a point of saying it is not going to lower its standards and contrast this with any old junk coming out of America. I exaggerate but the direction is clear. What could be at play here? Planes, cars, food and drugs immediately spring to mind. But I think there’s also scope for the EU to start launching ‘clean’ versions of American software. Why limit yourself to protecting EU citizens’ data when you can start making versions of American software which are not subject to the commercial pressures which are making Google or Facebook, say, overly advertising focused. They can start off by being pretty basic but the core functions would just work.

Clean energy – America has oil and gas, Europe doesn’t. So if I am in Europe and I see Trump saying that America is not going to invest in renewable energy, I should be delighted. Europe won’t have to compete with America for this resource, it will develop better technology while America stagnates as companies there don’t get the experience of building renewable resources, all the while creating a cheaper, more efficient energy base. Europe is already making decent moves here with wind and solar overtaking coal and gas, put the foot on the accelerator and get rid of external energy dependence as quickly as possible:

Solar overtakes coal in EU power sector, as gas declines for the fifth year in a row | Ember

Given the drop in the cost of renewable energy that we see here:

IRENA Renewable Power Generation Costs in 2023, page 38

It’s time to take advantage of America’s reticence and get building renewables in Europe.

And yes, electric cars aren’t as cheap as petrol ones. But they are getting ever closer if you look at the latest offerings from Renault, Fiat and Kia where a car might cost €5.000-10.000 more than the fossil fuel equivalent. And at the rate we see battery prices dropping/efficiency improving, electric cars will probably be on a par within a couple of years and better than petrol ones by the end of the decade. America will have braked at precisely the time when it should be committing to electric because of the foibles of one man. For Europe, this is an opportunity.

Diversity, Equity and Inclusion – Make Europe an attractive place for a diverse range of people to live. I mean it already is with 27 different nationalities and an equally large range of cultural heritages. But be more accepting of immigration, after all, we need it giving the ageing population and be more consistent about integrating people but also accepting the diversity they bring. Fifty/sixty years ago we had Italians coming from the South of Italy to the North who were denigrated as terroni for bringing their foreign ways and being poor, now it’s just immigrants in general because they are still poor. But they’ll come, they’ll adapt, they’ll integrate and the suddenly, like in Britain, you find that curry has become the national dish.

NATO and defence – which country in the world has the most experience of fighting a modern war? Ukraine. Where is it? Europe. The war in Ukraine should teach Europe a couple of things: that it has the capacity to fight a war with its own weapons if it puts its mind to it; that its weapons are as good as any others sold around the world. Create a new arms industry and go and sell these products around the world on the back of their success in Ukraine. And the USA gets a competitor where it didn’t have one before.

In general, I feel a confident America, or one led by someone capable of looking beyond the gains possible in the next 5 weeks, would have looked at the opportunities and said, ‘Let’s make this work.’ The fact it hasn’t means there’s an opening for someone who is prepared to look to the future.

Remember that before becoming president Trump had done nothing of note and pretty much every business he had touched had gone bankrupt – casinos, real estate, the university. This is not a man who has much ability to actually run an organisation. Ignore him, call his bluff, whatever, just get on with doing the things which Europe does well.

Everyone spends so much time listening to Trump because he’s loud and he has a lot of power that we seem to have forgotten to ask whether he’s right and able to wield it. Hint – he’s not. Use this against him.