Following Trump's election win, the US dollar strengthened significantly, causing the euro to drop to a four-month low, while Bitcoin surged by 10% to a record high.

The European Central Bank's vice president, Luis de Guindos, has highlighted the need for caution in adjusting interest rates amid the uncertainty stemming from Trump's election and ongoing geopolitical conflicts.

Concerns are mounting across Europe about a potential economic recession linked to anticipated tariffs under Donald Trump's presidency, which is set to begin on January 20, 2025.

Previous tariffs imposed by Trump on EU steel and aluminum, along with threats to automotive imports, have already strained EU economies, with new tariffs proposed to range between 10% and 20% on European goods.

Germany, heavily reliant on trade with the US, is particularly vulnerable to these tariffs, especially concerning automotive exports.

In a full-scale trade war, German exports to the US could decline significantly, with sectors like pharmaceuticals and cars projected to face drops of up to 35% and 32%, respectively.

Exports are crucial for Germany's economy, accounting for half of its growth, with US exports valued at over €157.7 billion in 2023, although they faced a slight contraction.

Trump has indicated plans to impose a 10% tariff on all non-US goods, which could start impacting the eurozone economy even before his inauguration.

The economic outlook is further complicated by the German economy's struggles, which experienced a 2.5% decline in industrial production in September 2024 compared to the previous month, and a nearly 5% year-on-year drop.

Goldman Sachs has downgraded the projected growth for Europe from 1.1% to 0.8% for 2025, attributing this to anticipated limited auto exports influenced by potential tariffs.

ING warns that a potential trade war initiated by Trump could push the eurozone economy into recession, transitioning from its current sluggish growth.

Despite the risks, Trump's presidency may also benefit defense sectors in Europe, as he is expected to pressure NATO members to increase defense spending, with many countries already meeting or exceeding the 2% GDP target.