“Europe Must Not Sit Back and Relax After the Democrats’ Election Win”

In the US midterm elections, the Democrats have won a majority in both the House of Representatives and the Senate. ZEW President Professor Achim Wambach, PhD comments:

“The Democrats' election win limits President Trump's room for manoeuvre on domestic policy. Uncertainty about the future direction of US trade policy remains high. Without a majority in the House of Representatives and the Senate, the President is likely to try to push his political agenda more strongly through trade and foreign policy, where he has far-reaching powers to act on his own. In addition, there is a growing risk of budget deadlock in Congress, which could lead to further shutdowns of the US federal government.

It would not be realistic to expect a Democratic majority to put the USA back on a path to free trade. The protectionist orientation of the US economic policy is not a peculiarity of the Trump administration: In Washington, there is broad cross-party consensus on trade policy towards China and on policy measures to protect domestic industry.

Europe must not sit back and relax after this outcome of the midterm elections, and it certainly should not bet on any particular outcome in the next US presidential election in 2028. Europe must now make consistent use of its own economic policy options. The conditions for greater competitiveness and strategic independence must be created first and foremost in Europe itself. They include, in particular, the removal of existing trade barriers in the European single market, closer cooperation with the United Kingdom, the swift implementation of the agreements with Mercosur and India, and the conclusion of the trade deal with the Philippines. A well-functioning single market and open trade relations increase Europe’s economic resilience and reduce one-sided dependencies.”