Each country has the government it deserves?

The title of this article is a quote by Joseph de Maistre, and this philosophical statement could lead to an endless conversation, especially in the aftermath of Trump’s election.

This newsletter is not about philosophy or politics. Nonetheless, we cannot discuss trading or investing without considering how governments can influence the economy.

In the past few days, I've been attending the Web Summit and witnessed our Prime Minister’s humiliating performance. The issue isn’t his inability to speak English - a weakness he should have addressed if he harbors political ambitions - but rather how he centered his speech on Portugal’s 500-year history of Discovery, a topic that nowadays is irrelevant. It was also embarrassing to hear him highlight the appeal of our country to entrepreneurs by mentioning our great beaches and delicious food. When discussing the government's plans to invest in AI, he struggled to grasp the subject matter: he didn't understand what he was saying, so we couldn't figure out what he was trying to communicate.

Luís Montenegro presented himself as an old-school politician, campaigning with a speech filled with empty promises.

On the other hand, Robert Habeck, the Vice Chancellor of Germany and Federal Minister for Economic Affairs and Climate Action, took the stage as a visionary. He moved around confidently and presented the major challenges Europe is currently facing in a pragmatic and straightforward manner.

He highlighted the threats facing Europe, which include Putin's ambitions, the rapid rise of extreme-right parties, and the global challenge of climate change. He also provided a more detailed perspective on Germany and explained how its government plans to regain a competitive edge.

Robert Habeck wore a t-shirt that said "Start-Up," explaining that his message was not only aimed at young and ambitious entrepreneurs* but also extended to all European citizens with a call to "Start something!" or "Do something!"

This leads me back to the European markets, with Germany being the largest and most competitive.

Trump’s victory will inevitably impact every area of E.U. policy, from drug pricing to green technologies and artificial intelligence standards.

Trump's "America First" approach to trade policy entails imposing tariffs on all European goods entering the U.S. Brussels and Washington face significant challenges, particularly in resolving the European Union's paused retaliatory tariffs against the U.S., which will expire in March 2025.

Analysts at Goldman Sachs predict that if the new administration implements its comprehensive tariff plan, the euro could fall by as much as 10% against the dollar, while earnings among Europe’s largest companies could decline by more than 5% next year.

Additionally, addressing the aircraft subsidy dispute between Airbus and Boeing is a priority, with a deadline set for 2026.

The reelection of Trump can adversely impact Airbus and the broader European aerospace sector, possibly resulting in a surge of protectionist measures aimed at supporting Boeing.

Trump's victory is likely to harm European carmakers, as he stated, “I want German car companies to become American car companies.”

Trump promised the lowest taxes, energy costs, and regulatory burdens for automakers that relocate production to the U.S., along with a tariff overload on those that do not.

In the short term, Trump's victory appears unlikely to facilitate the global implementation of bank capital regulations known as Basel III. These rules were established in response to the 2007-2008 financial crisis; however, the U.S. has delayed their rollout due to substantial lobbying efforts by the banking industry.

Trump's victory may lead to the abandonment of global bank regulations, potentially resulting in financial instability.

Under the Biden administration, the E.U. maintained open lines of communication with the U.S. regarding technology policy. However, the Trump administration can signal the end of the U.S.-E.U. Trade and Technology Council, a biannual forum established in 2021 for discussing tech policy and coordinating on issues such as semiconductors and artificial intelligence standards.

The failure of the U.S.-E.U. Trade and Technology Council could be harmful as global cooperation on AI governance becomes increasingly essential.

Trump's victory has the potential to usher in an uncertain era, as he has not clearly articulated his position on industrial policy or antitrust regulation beyond his "America First" approach. While he does not support Big Tech, he has shown frustration with European efforts to regulate American companies.

Trump seems to be opposed to U.S. and E.U. antitrust initiatives regarding Big Tech.

During Trump's administration, Europe will be forced to strengthen its efforts to reduce dependence on the U.S. as a partner. This will involve developing an economic security strategy that prioritizes domestic production while exploring a diverse range of international suppliers and markets.

This may lead to increased pressure for E.U. merger reviews to allow larger European companies to consolidate, as well as for greater government support to nurture European champions.

* A critical observation about his speech is that he emphasized that Germany's delegation was made up entirely of women. However, I believe that feminist rhetoric often implies that women need protection, which suggests they are somehow inferior to men. Having worked for nearly 20 years in male-dominated industries, I have experienced discrimination and chauvinism firsthand. I understand that these seemingly positive initiatives can quickly become cynical and counterproductive.