Since the war in Ukraine, Europeans have been paying a high price for their new dependence on American gas. And after the Biden administration’s massive plan to support American reindustrialization, the Inflation Reduction Act, the new President Trump intends to resume hydraulic fracturing and increase customs duties on all imported products.
At the same time, the French budget provides for an increase in taxes on large, profitable companies and an increase in labor costs with a reduction in contribution reductions. Pierre-André de Chalendar, president of the Enterprise Institute – employers’ think tank – and former boss of Saint-Gobain, comes to talk to us about the state of mind of business leaders in France today.
French: To the victory of Donald Trump, thehe French – and European – bosses were in no hurry to react. Can we see there a sign of concern?
Pierre-André de Chalendar: Overall, we cannot say that this election is very good news for the European economy. And what is probably the most worrying is the uncertainty: we already know Donald Trump, he is a very unpredictable person. And businesses don’t like uncertainty. But the consequences are not major compared to the problems we already have, which are very serious. They were highlighted not long ago by the Draghi report. There has already been a huge shift away from Europe in recent years.
After the hundreds of billions of dollars infused by the Biden presidency into the local development of green industry, Trump wants to resume hydraulic fracturing, which risks further promoting energy made in the USA. Is that bad for French and European industry?
In fact, it’s not good for the climate, but for European industry, as we no longer have Russian gas, we have to find it somewhere. So the fact that there is more liquefied gas arriving from the United States, and therefore rather less expensive, is rather good news for our industries. And for the climate, gas is still a transition energy. So if the Germans replace coal with gas, that’s already better. We have nuclear power, we’re not very concerned in France, but for Europe, it’s pretty good.
But are we at risk of being even less competitive when we look at energy prices?
No, because we are already not competitive at all. American gas, as with Qatar gas, must be liquefied, transported and then regasified. With these three operations, gas is much more expensive in Europe than in the United States anyway.
“What can happen with Trump is that if there is more gas in the United States, prices there will go down. But prices in Europe will go down too.”
Pierre-André de Chalendar, president of the Enterprise Instituteat franceinfo
Another cause for concern, Donald Trump plans to increase customs duties on all imported products, to promote production and therefore employment in the United States. What do you think of this strengthening of protectionism among France’s 4th customer?
That’s not good. Generalized protectionism is not good. So he should do it especially in relation to China, a little in relation to Europe. And the risk in relation to China is that as a result, more Chinese come to Europe. This is not necessarily good for French products exported to the United States. But in our misfortunes, this will affect the Germans much more than the French. The Germans export massively to the United States, we, unfortunately, a little less. The wine, they are not really going to replace it with American wine. It will be more expensive for the American consumer.
So it’s ultimately not that bad, when we look at the fact that Chinese products that are not going to go to the United States will end up in Europe?
Europe will have to review its policy, towards the United States, but even more so towards China. The big subject – and we can try to look at things positively, even with the observation of the Draghi report – is that faced with Trump on protectionism, if Europe reacts very strongly, perhaps he will go back . So the big problem is to know if Europe will be united and if there will be a European revival.
In France, at the same time, the budget provides for an increase in taxes on large, profitable companies and an increase in labor costs with a reduction in contribution reductions. Is that also a bad signal?
So first of all, the 2025 budget has not been voted on. For the moment, the worry is that there is such cacophony in the National Assembly that there is great uncertainty.
“The uncertainty around the Budget is not good and today, the French economy and industry are hardly stopped because of it.”
Pierre-André de Chalendar, president of the Enterprise Institute
Afterwards, we will see what the effective measures are. On taxes, it’s not a very good thing, but if they are temporary, and we have the guarantee of having reforms on public spending, which is the most important subject, I think that we can understand it. What worries me is: are we really going to make serious reforms to public spending? And that is what France needs today.
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