"A golden age is coming for America", Trump told Americans when he proclaimed victory in the presidential elections. However, Europeans expect commercial tensions and increasingly difficult relations with the world's largest economy. Analysts have calculated that in a tariff war in which Germany, the largest European economy, is hit directly, the first victims will be the countries of Central and Eastern Europe.

Trump's "red sweep" means Republicans are now in control of the White House and both chambers of Congress. Republicans promised deregulation, tax cuts for Corporate America and consumers, protecting the American market, and increasing trade tensions globally. These economic measures are considered as stimulants for growth of the US economy. And when the largest economy in the world grows, the positive impulse should be felt by the entire world economy.

But there are analysts who believe that these measures will not help the American economy much because they focus on manufacturing production, whose role in the economy has diminished over time. In 1970, industry contributed 30% of jobs. Currently, the contribution is 8%. But the budget expenditures will certainly give a substantial boost to the economy. The positive effect of American growth on the world economy may be blocked by protectionism.

The German Economic Institute calculated that the scenario in which the US imposes tariffs of 60% on imports from China and 10% on all other imports would have a negative impact of 0.6% on global GDP in 2025 and 1.1% in 2027. If Beijing also responds with tariffs, the shock will be greater. A global tariff war will be harmful for exporting economies, and in the EU the biggest victim will be Germany, the growth engine of the region. Another victim will be the euro and there is already talk of the European currency reaching parity with the dollar or even lower. Year-to-date the EURUSD is down 4.38%.

Europe will also be disadvantaged by the higher corporate taxes compared to American ones, the risk being that European businesses will consider the American market more attractive for investments. If so, imbalances will be created, especially in the markets where European companies compete with American ones. It remains to be seen whether Trump will consider the EU a partner or an enemy in the economic and technological war against China.

The US could also pressure Europe to cut ties with China. Germany is dependent on China, but also on the USA. This makes all countries that export subassemblies to Germany, vulnerable to Trump's trade policies. Germany is Malta's largest trade partner accounting for about 16.8% of Malta's exports, or $549 million in trade volume in 2022. Malta's exports to Germany include pharmaceuticals, machinery, electronics, and optical products.

America chose Donald Trump. Europe did not. But this does not mean that the return to the White House of the one who plays with trade wars does not bring opportunities for Europeans. In response to the election of Trump as president, EU officials have signalled a firm stance against potential trade conflicts. According to statements made by senior EU diplomats, the EU is prepared to retaliate "quickly and with force" if the new US administration initiates a trade war. EU countries, operating under the coordination of the European Commission, reportedly feel confident in their strategy and believe they would be well-positioned to succeed in any trade confrontation with the US.

In Trump's first term as US president, European leaders and institutions were caught on the wrong foot by his protectionist policies and the disruption of the Western order that the Republican brought. From various interviews, meetings, and discussions it appears that this time Europe has learned its lesson and is more united and determined than ever to face Trump.

This does not mean that the "adversary" camp will not try new strategies. But what the spectre of Trump's arrival has changed in the EU is the creation of that unity that diplomats talk about, even if forced.

Trump could force more and faster good changes for the European Union. The aggressive policies of the new American president may force Europe to more actively seek partnerships with the states of the Global South for the power dynamics on the world stage, to build stronger commercial relations with the economies of the Indo-Pacific region, Africa, and South America.

The pressure for diversification will be greater when pushed to the wall, but so will the determination of the EU for independence. Improving competitiveness is already on the European agenda, as seen in Mario Draghi's report. But most governments are afraid of comprehensive and painful reforms, except in two areas: deregulation and the formation of a capital markets union. Governments fear a common tax policy, rapid disengagement from Chinese supply chains, joint infrastructure development projects and protectionist measures.

The competitiveness of individual countries in the union is at stake as they compete within the EU for funds, investments, resources, young people, and labour. If Trump continues his first-term policies or takes them to another level, the EU will have no choice but to apply protectionist measures itself, accelerate economic integration, change cohesion policy, and build its own common diplomatic system around the world.

EU diplomats say that if Trump's America proves to be a toxic partner, the European defence industry will have nothing but to gain. But they do not expect the protective umbrella of the US military to disappear from the continent overnight. Trump will not withdraw American soldiers from European NATO member countries because most of the European members will arrive in time to comply with the defence spending requirements, the already famous 2.5% of the budget for Defence.

The more optimistic attitude can be explained by the fact that EU-US relations are currently weaker than they were before Trump's first term. The Biden administration has improved defence cooperation, but economically the relationship is frozen. No result was reached in the negotiations regarding the American Anti-Inflation Act, through which Biden attracted valuable investments from European companies to the US.

A new Trump administration will have to make EU stakeholders forget about individual egos and work together to the better integration of the Old Continent. In the end, what doesn't kill you, makes you stronger!