Villeroy de Galhau Warns of Economic Risks Under Trump

The return of Donald Trump to the presidency of the United States after his victory in the election on November 5 raises serious concerns well beyond American borders. Indeed, during a recent intervention in Lyon on Wednesday, November 6, 2024, Villeroy de Galhau did not mince his words. For him, “this new Trump administration would increase risks for the global economy.” This statement serves as a reminder to Europeans of the urgency to strengthen their economic resilience and to elevate their autonomy in the face of an increasingly protectionist American model.

An increased risk of protectionism and its economic effects

During his speech, François Villeroy de Galhau emphasized that the policy of Donald Trump, marked by aggressive protectionism, could have detrimental effects on the global economy. “A Trump administration would likely lead to more protectionism,” he stated. This would translate into rising inflation, “at least in the United States,” and a slowdown in international growth. Thus, this prospect of a return to protectionist policies is not unfounded. The new occupant of the White House has already announced his intention to impose additional tariffs, particularly 60 % on Chinese imports, as well as a 10 % increase on those from other countries. According to a study by Roland Berger, these measures could cost the European economy up to $533 billion by 2029.

The impact of this protectionism would be particularly visible in terms of trade exchanges and prices of imported goods, with inflationary pressure likely to hinder efforts for economic recovery in Europe and elsewhere. Moreover, the Bank of France, through the voice of its governor, warns that such a Trump policy could negatively affect the dynamics of global growth and establish a new era of trade conflicts. Europe, according to Villeroy de Galhau, should quickly “remobilize” to reduce its dependence on American and Asian markets and strengthen its own investment capacity.

Europe facing the challenges of resilience and economic sovereignty

Beyond protectionism, Villeroy de Galhau also mentioned structural weaknesses in Europe that could exacerbate its vulnerability to this return of Trump to the White House. He insisted that “Europe approaches this new reality with obvious weaknesses.” Indeed, he notably cites a “technological lag” and a significant “political division.” This situation weakens the position of the old continent in an international context where major powers, particularly the United States, are now favoring more nationalist strategies.

For the governor, Trump’s victory should serve as a catalyst for Europe to unite and invest in its own strengths. For example, he mentioned the enormous potential of European savings, currently underutilized, of which “several hundred billion per year” are invested outside the continent. According to Villeroy de Galhau, mobilizing this savings to finance local projects and respond to European economic needs could help the EU reduce its economic dependence and strengthen its autonomy. The Capital Markets Union (CMU) project, despite years of stagnation, thus appears as a key solution for Villeroy de Galhau, in order to more effectively link European savings to the necessary investments on the continent.

Through this call for a European economic remobilization, Villeroy de Galhau sheds light on a critical issue for the continent’s economic future in the face of potentially hostile American policies. If Europe manages to respond pragmatically and capitalize on its resources, it could limit the effects of increased protectionism under the next Trump administration. However, the scale of the reforms to be implemented and the necessity to overcome internal political divisions remind us that this economic transformation advocated by the Draghi report is not without challenges.