FOR For Europe's economy, the Nov 5 United States election offers a "least bad" outcome of a challenging Kamala Harris presidency or a second encounter with Donald Trump which threatens to be more bruising than the first.
On two key areas — trade policy and the sharing of rising security costs among North Atlantic Treaty Organisation allies — Europe expects few favours from a Harris presidency which it sees as "Biden continuity".
Trump 2.0, on the other hand, presents multiple dangers: if
he were to pull US support for Ukraine, European governments would need to ramp up defence spending fast; and if he triggered a global trade war, Europe fears it would be the big loser.
Anti-China measures are a rare area of bipartisan agreement in the US election campaign.
For Europe's export-driven economy, that raises the question as to whether it can continue to juggle trade ties with both the US and China.
"Whoever the winner of the US election is, it is unclear whether Europe can continue to benefit from US growth without reducing trade with China itself," said Zach Meyers of the Centre for European Reform (CER) think tank.
"Both US candidates have the same direction of travel — Trump less predictable and perhaps willing to be more confrontational with the European Union."
For ASML, a Dutch supplier of hi-tech microchip manufacturing equipment, the risk of collateral damage from US efforts to "contain" China is all too real. It already faces export bans on half its products to China after a US-led campaign.
"There's a strong will in the US to seek more restrictions. I think it's very clear and it's something that's bipartisan," ASML chief executive officer Christophe Fouquet told a conference last month.
"And so, I think whatever happens in November, this will stay."
Half of Europe's output comes from trade, double the rate in the US, while the region's 30 million manufacturing jobs — compared with only 13 million in the US — mean it is highly vulnerable to anything that restricts commerce.
Support for free trade in Washington has evaporated in the past decade. Joe Biden chose not to scrap outright tariffs levied in Trump's first presidency and has added his own focus on US jobs with the Inflation Reduction Act (IRA) subsidies.
While Harris is seen pursuing a path similar to Biden, Trump has threatened to go further with across-the-board tariffs of 10 to 20 per cent on all imports — including those from Europe, with whom America still has annual trade worth over €1 trillion.
Spanish olive producers have seen their exports to the US, once their main foreign market, slump by 70 per cent after Trump in 2018 imposed tariffs which remain in place despite World Trade Organisation (WTO) rulings against them.
"If Trump wins, this could get worse and we think it will be difficult to resolve this without pressure from Europe," said Antonio de Mora, head of ASEMESA, the body which represents Spain's olive exporters.
For European companies with US presence, the added uncertainty is whether Trump will follow through on promises to scrap Biden's IRA green energy subsidies.
German machinery firm Trumpf, which employs 2,000 US staff members and supplies equipment for electric vehicle batteries and solar, told Reuters it was not expanding those activities in the US due to uncertainty about the election outcome.
The US election could also have major implications for the defence budgets of European governments struggling with debt levels inflated by post-pandemic recovery spending.
Again, the question is more one of timing than destination: Harris is expected to pursue US pressure on Europe to pick up more of the tab for regional security while the lack of clarity around Trump's commitment to Ukraine hugely ups the ante.
"In our view, a Trump presidency increases the risk that spending needs to be ramped up sooner, while a Harris presidency may give Europe more time," UBS analysts said in a note.
Thus, while a Harris presidency could have little measurable impact on Europe's economy, the downside risks of a second Trump presidency are tangible.
The writers are from Reuters