Europe on the Brink of Economic Disaster

After President Trump announced its sweeping tariffs on imports into the US, Europe has suffered paroxysms of fear and doubt about its continued existence.

While the EU is justifiably unhappy about the new tariffs of 20% on the EU, they should recognize that it could be much worse. Because the EU poses the second-largest US trade deficit by country. If the EU escalates with more tariffs on the US, the outlook for Europe’s stock markets and economy will be grave. Its pretentious, woke-inspired eco-activism and socialist politics have been a big source of friction for all of its trading partners.  It could be we’re seeing the end of socialism.

Reuter reports that European stocks suffered their worst day in eight months after US President Donald Trump announced the steepest tariffs in a century, including a 20% rate for the European Union, Stoxx Europe 600 Index sank 2.6% while European banks — which led the rally this year — were among the hardest-hit sectors, falling 5.5% and euro carmakers extended their year-to-date losses to 7.2%.

European equities indexes suffered 2% to 3% losses today which seems much too light given the EU is about to lose $240 billion of exports to the US. And subsequent escalation and economic pullbacks could be damaging.

The UK other hand saw its tariff rate rise to only 10%, while President Trump warned the UK government about freedom of speech violations in Britain.  The UK situation too, is likely going to be touch and go.

Trump Prepares the US for Reindustrialization & New Prosperity

A quick look at US economic performance and rising national debt, and how other countries have found creative ways to keep US products out of their countries, you realize the stupor that Americans have been in for decades now. A national debt of $36.6 Trillion dollars with $1 Trillion in interest payments alone, perpetual government funding crises, and a trade deficit of $1 trillion reflects a sort malignance in the American population that took hold.

Trump explains the tariffs are to level international trade and prepare the United States for reindustrialization. It is an historic act for the US and sets the stage for significant investment inflows, job gains, GDP growth, and saving the highly indebted US government. Now with the tariffs set and clarified, foreign direct investment will balloon in the next 2 years as companies must build in America.

Negative Responses and Disrespect

Disrespect is something the Democrat media never discuss. Their view is that during the last 30 years, the US has disrespected the world, and that investing in China is the better path. Now, that attitude is being put to the test in real life.

The response from many foreign governments was indignant and negative and the Europian and Democrat media are playing up the immediate pain of Europeans and Americans about the cost of adjusting.  The Democrat regime’s own economic policies are not mentioned. Europeans believe Trump has a responsibility to continue the trade imbalances.

The EU minister was speaking in threatening tones today, and claiming the whole world will punish Trump and the USA for cutting them off. A surprising stat is that the European Union has the second-highest trade surplus with the US, hitting almost $240 billion in 2024 alone. Yes, that is just one year, or average to almost $1 trillion over 4 years.  They fail to comment on whether any other nation in history could possibly handle that massive loss.

Here is the official report from the USTR Website:

European Union Trade Summary

U.S. total goods trade with the European Union were an estimated $975.9 billion in 2024. U.S. goods exports to the European Union in 2024 were $370.2 billion, up 0.7% ($2.6 billion) from 2023. U.S goods imports from the European Union totaled $605.8 billion in 2024, up 5.1% ($29.4 billion) from 2023. The U.S. goods trade deficit with the European Union was $235.6 billion in 2024, a 12.9% increase ($26.9 billion) over 2023.

“We are now preparing for further countermeasures,” says European Commission President Ursula von der Leyen.

The EU Chief said the bloc would implement new countermeasures, in addition to a €26 billion package responding to tariffs Trump had imposed on steel and aluminum. She complains about rising costs for Europeans, but it reflects the weakness of Europe, and puts its socialist policies into deep question.

Europe as a commune has been a negative cartel for many of its own nations, e.g., Britain which took its “Brexit” and has done well. It might be said, that only Germany benefited from the Union. The others are probably hoping for a breakup and a return to fiscal responsibility and sovereign control of their countries.

In a report from ING bank (Europe’s worst economic nightmare is coming true), they believe the EU will reinstate previously suspended tariffs on a range of US goods and apply even higher counter-tariffs on products such as agricultural and food items, textiles and apparel, footwear and headgear, furniture and bedding, household appliances and tools, construction and building materials, optical products, precious metals, and lighting.

The false belief is that the US can’t produce these things itself, but with trillion-dollar foreign direct investment and reindustrialization over the next few years, the US likely will be able to produce much of what’s being imported now. The EU then sees this as a total loss of trade, with no recovery in sight. That is a tough break, but they’ve had plenty of warning to ease the US trade pains. They should have acted and respected the United States. The fault is there’s.

If you take advantage of someone for a long time, do you respect them?

The UK was only hit with a 10% tariff, which might irk the EU Chief. And Ireland wasn’t cited, but it has a big trade surplus with the US. Perhaps the 10% tariff will ease the US trade deficit.

Europe Economic Growth Forecasts: Heading to Where They Should Be

According to a report in Politico, the ING bank on Wednesday reduced its forecast of GDP growth for the eurozone to 1 percent next year from 1.4% in anticipation of the tariffs, and shaved its outlook for this year.

“For now, we are reducing our eurozone GDP growth forecast down from 0.7% to 0.6% YoY, for 2025, and from 4.0% down to 1.0% for 2026.”

It’s not just trade. Trump’s reactivation of fossil fuels means the cost shackles have been removed on American productivity.  The end of carbon taxes is next as these elite nations can no longer afford the cost.

Trump’s new tariff rate on the EU takes into account non-tariff obstructions to US exports. The EU uses a controversial VAT tax and then dishes out rebates to its own countries. Trump is shedding light on these covert practices to cheat the US and other countries too.

Retaliation is the Worst Action to Take

The retaliation against the US is expected and unfortunate, because Trump has already warned that the tariffs will be increased if other countries escalate their tariff rates.

If Europe decides to go that route, it could be devastating for them.  They have very poor leadership and the best route for all countries is diplomacy and bilateral trade agreements.

However, Trump is set in protecting the US during this reindustrialization process. It could be Europe has no confidence in itself, that it will be unable to compete with the new US or China. They likely believe it will be what Trump calls a golden era for the US. The EU chief didn’t mention the $400 billion dollars the US gave the Ukraine to fend off Russia, who are actually just menacing Europe. Trump has said the US won’t protect any countries that won’t maintain their military spending and contribute to ensuring world peace. Europe is deathly afraid of Europe who have tried to portray their cowardice as passive resistance to Putin.

Recently, their stock markets were outperforming US equities substantially, prompting invest advisors to recommend buying European stocks. Today, they’re likely very despondent about that investment decision, for those who did so.

EU Fears its Union will Disappear without US Funds

The EU minister’s response was that the world will react and oppose the rise of the US.  Europe has a significant trade surplus with the US, which the US obviously can’t afford given it is on the verge of economic collapse. She made comments about the anti-dumping policies against the US, which seems insulting.  Right now, the US doesn’t make too many things cheaply. But maybe she knows something about the future?

Now we’re waiting the EU’s actual response and about the news of the union’s breakup, given it was all built on US dependence and spending.

Canada too was hit with steep 25% tariffs on vehicles, steel and aluminum is not happy either. But it could have been worse. Canadians have to take stock of themselves and their choices and try to partner up with the US in its big reindustrialization process. Otherwise, Canadian companies and top talent will go south, and investors will turn away from the country.

Canada’s unelected Prime Minister (former UK bank governor) played himself up as “Captain Europe” during the tariff crisis, to appeal to senior-aged Canadian voters for the upcoming election, and was speaking trade deals in a visit to Europe. It was a disastrous trip for him, showing he’s not in tune with International business, and that his former UK connections don’t really like him.

Canada can be a good source of carbon energy to the EU who are in dire need of cheap energy. The power needed for blockchain, data centers, and electric cars won’t be fed by windmills.  Once they dismantle their fake climate-based agenda, Canada could be a key asset going forward. Otherwise, they are once again beholden to Putin and Iran for carbon-based energy. They’re in an uncomfortable spot.

Canada too is in the midst of a national crisis with the Province of Alberta having suffered decades of oppression and abuse from the Canadian Federal Government. The province of Quebec was awarded an incredible $14 billion dollars of transfer funds collected from the western provinces. In a show of their gratitude, the Quebec government says it will block oil and gas pipelines from Alberta across the province. Their genuine intent is to counter any initiatives of Alberta for fairness and exports to Europe.

The tariffs have exposed every country’s true intent and level of respect. Like the teenager forced forced to leave home for the first time, they’re slamming the door behind them, and not thinking of the grand opportunity they enjoyed and still might enjoy. Where fools tread.

They say gratitude is a key virtue, and in this case, Europe needs to stay in Trump’s good books and even work to regain his respect for them. Otherwise, they’re headed for their own economic disaster and breakup.

I wonder what the European leaders will say about the EU after the coming breakup?

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