Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
The CEO of Deutsche Bank’s asset manager DWS claims that US President Donald Trump’s tariff policy has proven to be a powerful, unpleasant catalyst for Europe’s long-term economic reforms.
In an interview with the Financial Times, Stefan Hoops said rising tariffs and geopolitical tensions rattled global markets, but surprised Europe with “satisfied, lethargic actions” surrounding infrastructure and defence spending.
“Europe has always been about capabilities and willingness to really compete. We have a lot of savings, great innovation, financial space, there is a lot of money we can do.
“The decision, which is an announcement by the US President, only drove Europe out of a rather satisfying and lethargic action.”
Hoop, who took over as the €1TN asset manager in 2022, said the push for EU recontracts and Germany’s plans to unlock defense spending and overhaul infrastructure are irreversible changes following Trump’s threat to end US security guarantees. “This places Germany in a fundamentally different path of growth than we were,” he said.
Trump’s geopolitical reorganization, including ambiguous positions to protect European allies, has led to major defence spending plans from countries, including Germany, France and the UK, if European allies are attacked.
Showing Trump’s hostile approach is crude but likely to be effective, he said: “You may question this method, but the outcome is that Europe is finally starting to move.”
Hoop acknowledged that Trump’s actions have long-term costs and could damage international cooperation on climate, research and trade. But in a balanced way, he said Europe is likely to perform well economically as a result of a new spending plan, and that many economists have avoided a recession that fears the US will fall as a result of trade-related disruptions.
The US Federal Reserve said Wednesday that uncertainty about the future of the economy has increased as high risk of unemployment and increased inflation.
“I don’t think people are optimistic in the US, and not pessimistic in Europe,” Hoop said.
German executives said it was too early to determine whether the US would suffer a recession, but he added:
Market volatility cast by trade disruptions forced asset managers to reassign their portfolios. But Hoops said uncertainty sifts through the worst investors.
“This is a true year for aggressive asset management,” he said. “If we can’t find a way to distinguish in this environment – marked by variance, divergence, structural changes, when can you do it?”
He added that volatility is also likely to drive transactions among asset managers. “I feel that current market behavior is not based on choice, but merely enforces integration. This would be interesting.”
