Investors are bracing for the possibility of Donald Trump returning to the White House after Super Tuesday confirmed that the November U.S.-election is set to pitch him against incumbent Joe Biden.
European Union (EU) policymakers are concerned that a Trump return could re-impose tariffs on imports of European steel and aluminum suspended by Biden.
Trump also says he would consider 60% tariffs on Chinese goods, a move Capital Economics estimates could cut as much as 0.7% off China’s GDP.
During his last presidency, Trump imposed tariffs on $200 billion of Chinese goods. Meanwhile, they remained in place under Biden.
Also, Trump is more likely to scrap subsidies for electric vehicles and focus on extending tax cuts.
Europe knows that a potential Trump return may add to urgency in Europe to build stronger military capabilities, adding fuel to a rally that has seen defense stocks double in value over the past three years.
Russia’s invasion of Ukraine in February 2022 has transformed defense from a no-go-zone over ESG concerns into a popular trade.
Trump has insisted that he won’t defend allies who fail to spend enough on defense – and would even encourage Russia to attack them.
Furthermore, immigration and border control in the U.S are pressing issues, some polls show.
Analysts note that Trump has so far not made the trade relationship with its southern neighbor a key campaign issue.
Chinedum Anayo