In the face of Trump's tariffs, we must look to Europe.
Let's say I have a businessman friend who was preparing to expand into the US. Given the current situation, he asks me for guidance. I advise him to wait and explore, however, the many opportunities that will open up in Europe.
Trump's tariff policy is based on two independent but mutually reinforcing "doctrines": trade and fiscal. Trade is built on the notion that a country should aim for a balanced trade balance. It's an outdated notion (for starters: why should trade balance be in physical goods, excluding services?), but one with pedigree. What's crazy is aspiring to achieve this based on a balanced balance with all the world's states. Perhaps we should congratulate ourselves on the level of sophistication displayed by having, for the moment, considered the EU as a whole. For the moment.
If it were only this, I would say that the whole thing is nothing more than a crazy exercise in negotiation. It would involve setting the best initial conditions for the US in order to agree on a distribution of the gains (from trade and other domains) more in its favor. These will be tough negotiations, because Trump lacks a realistic perception of the US's weight in today's world. But even so, I believe the outcome would be not completely out of step with the traditional proclivities of the Republican Party, more favorable to free trade than those implicit in the current position of the US government.
However, confidence in this outcome is diminished by the influence of fiscal doctrine. This, highly valued by Trump, views tariffs as a source of public revenue. It thus breaks with a basic principle of taxation: if what justifies the existence of a tax is the desire to regulate an economic activity, we should not add a second tax-revenue responsibility. It will interfere with the first. If the activity is to be suppressed, the tax will be too low, and if the activity is a necessity for the economy, the tax will be too high. There's more: as with any tax, it's not easy to separate yourself from the revenue generated by tariffs. But, unlike core taxes, high tariffs can only be justified temporarily: at some point, you have to separate yourself. Incidentally, this observation also applies to the EU. Hopefully, the current crisis will lead to an increase in the EU budget's share of core revenues. That would be a major step toward strengthening the Commission as the government of the EU. Doing so by raising tariffs would be a mistake.
In short, and for my businessman friend: the US as an export destination will worsen. It's another matter if manufacturing there were to be considered. In this case, my advice is to keep thinking about it. It may become an option. But it's best to wait until the outlook becomes clearer. And it shouldn't be forgotten that if you sell from Europe, you will be paid in euros, but if you sell from the US, you will be paid in dollars. Exchange rate risk may end up being the most important consideration.
On the other hand, uncertainty will not increase within the EU, which is our internal market. Furthermore, the current situation is favorable. On the one hand, it's very likely that combined action by the Commission and the European Central Bank could avoid the worst effects of a potential recession. On the other hand, and more importantly for companies involved in high-tech sectors, the triple impact of the COVID-19 crisis, the Ukraine war, and the Trump shock are leading Europe toward a strategic self-sufficiency agenda (including defense) that, if intelligent, will not be based on tariffs, but on an industrial policy.
Europe will act via loans—with the European Investment Bank (EIB) playing a leading role—and also, but less so, via subsidies. This will include putting public procurement at the service of the cause (with European content requirements), sovereign wealth funds (in Spain, SETT has pioneered the process), the controlled relaxation of state aid regulations, the strengthening of innovation policy, and European policy (fiscal and competition) to control oligopolies, especially digital ones. A huge, growing market right at home. An ideal environment for companies with drive.
