The US President may target industry in Europe and China in a show of strength after his Republican Party lost control of the House of Representatives, it is claimed. Mr Trump could exacerbate existing trade disputes as he relies on compromises with the Democrats for domestic issues, but has largely free rein in foreign trade policy, according to President of the Munich Ifo Institute Clemens Fuest. Mr Fuest on Wednesday said: ”It may be that Trump will be even more aggressive towards Europe and China, to distract from the fact that he is under pressure from domestic politics and can not do much.
It will be uncomfortable for Trump, but I do not expect improvements for Europe in the dispute over tariffs and military expenditures.”
The Democrats overturned the GOP’s House of Representatives’ majority this week, but Mr Trump’s Republicans held on to the Senate.
Despite the setback, Mr Trump claimed this week’s results were a victory for Repubicans.
He also threatened to investigate the Democrats if they launched probes into his tax affairs.
And with Mr Trump smarting from the electoral blow, German business chiefs are concerned he will plough on with his “America First” protectionist trade policies.
He has already imposed tariffs on foreign steel from allies the EU and China, with fears of more to come.
Mr Trump has threatened Europe with “tremendous retribution” and the possible tariffs on its cars and vehicle parts.
The Federation of German Industry’s Association President Dieter Kemp said: “The German industry must be prepared for future headwind from Washington.
“We have little confidence that anything will change in the protectionist orientation of American trade policy.”
Wednesday’s result was proof that Mr Trump’s economic strategy was endorsed by “large parts” of the US electorate, according to Federation of German Wholesale and Foreign Trade (BGA).
With the Democrats also backing tougher trade measures with China, business in Europe and the rest of the world should be braced for more of the same fromthe US, according to economist Volker Wielan.
He said: “We can only hope that it does not hit us.”
Additonal reporting by Monika Pallenberg.