Europe’s welfare states are at risk. Trump could make the problem worse

Europe’s generous welfare states are coming under increasing strain as weak economic growth collides with rising demands on government budgets, particularly from aging populations.

Europe’s generous welfare states are coming under increasing strain as weak economic growth collides with rising demands on government budgets, particularly from aging populations. Donald Trump’s return to the White House Monday only adds to the uncertainty facing one of the world’s most stable and prosperous regions. The incoming US president is due to address the annual meeting of the World Economic Forum this week. European government and business leaders gathering in the alpine town of Davos in Switzerland will be anxious to learn about Trump’s plans, including for tariffs on imported goods and the war on their doorstep in Ukraine. The United States is the biggest buyer of European goods and the tariffs Trump promised on the campaign trail are expected to decrease growth in the region. Even the mere threat of higher import levies could do so, because of the resulting drag on business investment as companies tread with caution, according to analysts at Goldman Sachs and J.P. Morgan. It is also uncertain whether Europe can rely on continued US military protection, with Trump threatening in October to abandon NATO allies — overwhelmingly European states — if they don’t increase spending on defense. Earlier this month, he called on members of the military alliance to more than double defense spending to 5% of their gross domestic product, from the current guideline of 2% — itself a level many European economies do not yet meet.