When Trump and Musk come to Europe
By Ross Douglas
In the coming year it is likely that Trump, Musk and friends will board a jet (with big macs and fries) and come to Europe to sign a peace deal with Putin, negotiate down the $160 billion trade deficit with Europe and visit King Charles at Buckingham Palace.
António Costa, a Portuguese socialist who is the new president of the European Council, will be waiting in Brussels to sign the deal. The FT recently interviewed him at Il Pasticcio, his favourite Brussels restaurant, where he has been a regular for 25 years and always orders the specialty pasta trio, helped by a glass of prosecco. Costa seems woefully unprepared for the encounter, asking “why would Trump want a trade war with Europe”, or is that just a cunning foil?
Disrupting Democracy
The results of the election were closer than people think; Trump got 49,9% of the vote, to Harris’s 48,3%. Musk’s support made all the difference. Allan Lichman who has predicted 9 of the last 11 elections using his 13 keys got this one wrong. Lichman blames disinformation spread by Musk and others, and amplified on new media. Only 12% of Americans pay for their news, which contributes to the power of X and podcasts over legacy media. The $45 billion Musk shelled out for Twitter is expensive when you think of the ROI in advertising revenue, but cheap when you consider what it bought him in political influence.
Trump and Musk are tight at the moment; Europe will have to negotiate with both of them. My guess is that Trump will put up tariffs on day one and then the dealmaking starts. America is possibly the only country in the world that can go it alone. It has cheap energy, a massive consumer market and is extremely innovative.
WHAT’S IN IT FOR MUSK?
X
Given his control of X, Musk can influence elections. It is reasonable to assume that he will put his toe on the scale in European elections, as he did in the U.S. When it comes to X, the EU might not be able to enforce its Digital Services Act (DSA), a law that clamps down on toxic online content. Ominously, JD Vance warned in a recent interview that interfering with X could compromise Nato funding.
“It’s insane that we would support a military alliance if that military alliance isn’t going to be pro-free speech. We’ve got to say American power comes with certain strings attached. One of those is respect for free speech, especially in our European allies.” (America comes 26th in the Global Freedom of Speech ratings, which is below most European countries.)
Tesla
Tesla is moving its focus to robotaxis, battery storage and humanoid robots. The reason its share price is up 35% since the election is that investors believe Trump will assist Musk in scaling robotaxis. In America, robotaxis are regulated at state level, but Trump’s transition team is prioritising the creation of a federal framework for fully autonomous cars. Tesla is unlikely to succeed in China, where established players are already operating and the Chinese government does not want the security risk of foreigners collecting data. But Europe is wide open, with no local competition and a massive market. European OEMs don’t have the cash to catch up and will probably look for partnerships with Chinese companies like Renault is doing with WeRide, who are more open to sharing than is Musk.
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Space X
Musk controls 60% of the world’s 10 000 satellites, and he plans to launch another 40 000 satellites in the coming years. European countries have a few hundred satellites and often rely on Space X to launch them. Europe has pumped $6 billion of subsidies into the Ariane 6, which was meant to launch in 2020 but only achieved one launch in 2024, with the next launch scheduled for 2025. Space X had 98 launches in 2023 and is scheduled for 148 launches in 2024.
Space is the next frontier for war. All military assets are connected by satellites, which also guide precision bombs. Europe, noting that Trump could pull out of Nato, is stepping up its defence. Europe has to keep Musk on sides for geostrategic reasons.
WHAT’S IN IT FOR TRUMP?
Trump has promised to deliver tariffs, American jobs, lower prices and lower taxes. However, tariffs lead to inflation, which means Trump will probably use them to onshore manufacturing, like Biden did with the IRA. Trump could offer European companies a way around tariffs so long as they set up their factories in the US, which boasts low energy bills, lower taxes and less regulation. European businesses will understandably be tempted. What’s more, if they’re on good terms with Musk they can rely on the Department of Government Efficiency to expedite issues such as approvals and get new factories built quickly.
He recently built a data centre for xAI in just 19 days (after 104 days of planning), which had Jensen Huang (CEO of NVIDIA) commenting: “As far as I know, there’s only one person in the world who could do that. Elon is singular in this understanding of engineering, construction, large systems and marshalling resources”.
It has been said that the US is a corporation, China an autocracy and Europe a technocracy. The real danger facing Europe is a flight of capital, IP and IQ to the US and there is no way Brussels can legislate around that. The EU needs a bold new economic plan and it needs it before Trump takes office at the end of January The Draghi report explains the challenges but not the solutions. Europe’s business community would be far happier if Draghi could articulate, in simple terms, what will be done for them. If Europe can become an attractive destination for entrepreneurs and business builders, then the pendulum will swing back again. If not, the deindustrialization of Europe will continue.
What are the 3 steps that will fuel a business revival in Europe?
I attended the Nick Cave concert in Paris last week, as did Bob Dylan who tweeted this;
“Saw Nick Cave in Paris recently at the Accord Arena and I was really struck by that song ‘Joy’ where he sings We’ve all had too much sorrow, now is the time for joy. I was thinking to myself, yeah that’s about right.”
More than a few European business people will be thinking the same thing.