Exploring ‘Europhoria’: New opportunities in the Old World

22 April 2025

As the Trump administration seeks to make America great again and imposes new tariffs on the world, it could help drive a wave of capital towards companies and entrepreneurs in Europe.

Investors were swept up by ‘Europhoria’ in March, envisioning a more self-reliant European economy after the European Union’s announcement of a defense fund^[1] that excluded US and UK arms manufacturers. Europe’s STOXX 600 reached a record high in March,^[2] buoyed by a rally in defense stocks that analysts^[3] saw as an early indicator of a broader shift.

But then came President Trump’s ‘Liberation Day’ tariffs on 2 April, which included steep levies on America’s allies on the old continent, and the start of wild market volatility. Much more severe than anticipated, €400 billion of the Eurozone’s €500 billion of exports to the US were impacted by the tariffs, according to Jefferies.^[4] Export-driven European indices like Germany’s DAX or France’s CAC took a body blow from which they still have not recovered.

Dismissing Europe’s resolve^[5] to reduce its economic reliance on the US would be premature, though.

As global trade adjusts to a more fragmented reality and Europe contends with an increasingly antagonistic US administration, the region’s policymakers, investors and entrepreneurs are mapping out plans to decouple – but not completely – from the US. While it won’t be easy, European governments are keen to reduce regulations and pivot toward trade partners such as Argentina, Brazil, India and Vietnam.

At the end of last year, European investors held approximately US$9 trillion of US equities — around 17%^[6] of the total market. If European entrepreneurs can weather the coming tariff storm and remain competitive against US and Chinese players, those investors could start redirecting capital toward companies on their side of the Atlantic.

If that happens, the years ahead could be golden for European entrepreneurs. For long-term shareholders and start-up founders, securities-backed financing offers a flexible funding avenue to ride these emerging waves of opportunity.

The fundamentals for a stronger Europe: New trade corridors, credit and updated regulations

Europe will continue to host globally-oriented firms, especially in frontier technologies. The region already has a leading position in bioengineering, quantum computing and next-generation connectivity.^[7]

Still, new markets for core European exports — such as machinery, vehicles and chemicals^[8] — are the most pressing needs. To offset US tariffs, Europe has made overtures like agreeing to increase American gas imports^[9] and lifting tariffs on bourbon, wine and dairy products.^[10]

Deeper diversification will come through trade relationships elsewhere, though. Deals are in progress with India,^[11] the Association of South East Asian Nations (particularly, Vietnam^[12]) and possibly South America’s Mercosur bloc.^[13] Rising incomes in these markets will lead to growing demand for both intermediate goods and finished products – areas where Europe has strong global brands and robust intellectual property protections.^[14] Europe’s demographics also help. Over 25%^[15] of European households include someone born abroad or with foreign-born parents, strengthening cultural and trade links to these fast-growing economies.

While these markets aren’t comparable in scale to the US and China — which together represent 43%^[16] of global GDP — finding new markets is urgent. Germany’s car exports to China fell by 25%^[17] between 2018 and 2023, for example. Meanwhile, rising Chinese exports in much the same goods categories are expected to flood global markets,^[18] as those bound for the US face tariffs as high as 145%^[19] as of April 11.

Germany, the EU’s economic engine, will be pivotal. Chancellor-in-waiting Friedrich Merz declared recently that Germany is “back on track”,^[20] after effectively scrapping the ‘debt brake’,^[21] a constitutional limit on government borrowing, and potentially unlocking €1 trillion to finance infrastructure and defense projects. Spending on this scale would significantly benefit German businesses and strengthen Europe’s economic resilience.

European technology companies could get also a lift from new geopolitical realities. In March, more than 90 European tech firms and industry groups called on European Commission President Ursula von der Leyen to create a sovereign infrastructure fund^[22] to boost investment in innovation. Many are also advocating for streamlined digital processes and a pan-European legal framework^[23] to allow start-ups to scale more easily across borders.

Still, entrepreneurs must temper optimism with realism. Red tape,^[24] complex European tendering requirements and labor shortages frequently hinder capital deployment. With a median age in Germany of 45^[25] and 340,000 STEM academics^[26] expected to exit the workforce by 2035, turning capital into innovation and growth won’t be easy.

Private capital will be required to make Europe great again, though, and from all sources. The continent’s banks and funds will play their part, but the growing range of alternative capital providers – including those offering securities-backed financing – will also be critical.

Ultimately, just as^[27] explorers from the ‘Old World’ once undertook voyages that changed global history, this generation of European entrepreneurs will define the region’s role in the 21^st century. They will need all the financing they can get.

[1] https://www.ft.com/content/eb9e0ddc-8606-46f5-8758-a1b8beae14f1

[2] https://stoxx.com/index/sxxp/

[3] https://www.reuters.com/markets/europe/make-europe-great-again-trades-are-gaining-traction-2025-03-31/

[4] https://www.ft.com/content/c2b84be5-e94a-48bf-b154-b5ec1c86baa5

[5] https://www.euronews.com/my-europe/2025/02/24/germanys-merz-marks-shift-by-betting-on-an-eu-less-dependent-on-us

[6] https://www.federalreserve.gov/releases/efa/international-portfolio-investment-figure3.pdf

[7] https://reports.weforum.org/docs/WEF_Europe_in_the_Intelligent_Age_2025.pdf

[8] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=International_trade_in_goods

[9] https://www.ft.com/content/4ba2bdb2-1588-418e-a9a1-b358ec46850a

[10] https://www.ft.com/content/180063de-15a8-4077-8daf-a6a591e117ec

[11] https://www.bbc.com/news/articles/c0eggy1104po

[12] https://www.reuters.com/world/europe-prepares-charm-offensive-vietnam-amid-us-trade-risks-2025-03-04/

[13] https://www.politico.eu/article/donald-trump-pushes-france-reassess-trade-alternatives-mercosur-deal/

[14] https://clarivate2023indexrb.q4web.com/news-events/press-releases/news-details/2021/First-Ever-Clarivate-Top-100-Best-Protected-Global-Brands-Report-Reveals-those-that-Demonstrate-Robust-Brand-Strength-and-Protection/default.aspx

[15] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Foreign-born_people_and_their_descendants_-_household_composition

[16] https://www.bbc.com/news/articles/c4g2089vznzo

[17] https://market-insights.upply.com/en/the-evolution-of-eu-china-trade-in-the-automotive-sector

[18] https://www.ft.com/content/0ab0aed5-4924-4234-9d8b-04154664488c?segmentId=114a04fe-353d-37db-f705-204c9a0a157b

[19] https://www.bloomberg.com/news/articles/2025-04-10/trump-tariffs-on-china-now-at-least-145-as-trade-war-ramps-up

[20] https://www.reuters.com/world/europe/german-coalition-deal-expected-around-midday-sources-say-2025-04-09/

[21] https://www.nytimes.com/2025/03/18/world/europe/germany-debt-brake.html

[22] https://www.reuters.com/business/aerospace-defense/airbus-others-call-sovereign-infrastructure-fund-buy-european-2025-03-17/

[23] https://www.ft.com/content/21db8861-f56a-4846-8bf8-4d42f322f378?segmentId=b0d7e653-3467-12ab-c0f0-77e4424cdb4c

[24] https://www.reuters.com/world/europe/german-coalition-deal-expected-around-midday-sources-say-2025-04-09/

[25] https://www.destatis.de/EN/Themes/Society-Environment/Population/Current-Population/Tables/population-by-territory-and-average-age.html

[26] https://www.reuters.com/markets/europe/german-fiscal-bonanza-no-quick-fix-red-tape-labour-snags-weigh-2025-03-21/

[27] https://www.merriam-webster.com/dictionary/old-world?show=2&t=1417643287#h2

Disclaimer

Past performance does not guarantee future returns, and individual returns are not guaranteed or warranted.

This Document is intended solely for accredited investors, sophisticated investors, professional investors, or otherwise qualified investors, as may be required by law or otherwise, and it is not intended for, and should not be used by, persons who do not meet the relevant requirements. The content provided herein is for informational purposes only and is general in nature and not targeted to any specific objective or financial need. The views and opinions expressed in this Document have been prepared by third parties and do not necessarily reflect the views and opinions of EquitiesFirst. EquitiesFirst has not independently examined or verified the information provided herein, and no representation is made that it is accurate or complete. Opinions and information herein are subject to change without notice. The content provided does not constitute an offer to sell (or solicitation of an offer to purchase) any securities, investments, or any financial products (“Offer”). Any such Offer shall only be made through a relevant offering or other documentation which sets forth its material terms and conditions. Nothing contained in this Document shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product by Equities First Holdings, LLC or its subsidiaries (collectively, “EquitiesFirst”), nor shall this Document be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by EquitiesFirst. You should seek independent financial advice prior to making an investment decision about a financial product.

This Document contains the intellectual property of EquitiesFirst in the United States and other countries, including, without limitation, their respective logos and other registered and unregistered trademarks and service marks. EquitiesFirst reserves all rights in and to their intellectual property contained in this Document. The Document should not be distributed, published, reproduced or otherwise made available in whole or in part by recipients to any other person and, in particular, should not be distributed to persons in any country where such distribution may lead to a breach of any legal or regulatory requirement.

EquitiesFirst make no representation or warranty with respect to this Document and expressly disclaim any implied warranty under law. You acknowledge that EquitiesFirst is not liable under any circumstances for any direct, indirect, special, consequential, incidental, or punitive damages whatsoever, including, without limitation, any lost profits or lost opportunity, even if EquitiesFirst has been advised of the possibility of such damages.

EquitiesFirst makes the following further statements that may be applicable in the stated jurisdiction:

The information contained on this Document is intended for persons located in Australia only and classified as a Wholesale Client only as defined in Section 761G of the Corporations Act 2001. The distribution of information to persons outside this criteria may be restricted by law and persons who come into possession of it should seek advice and observe any such restriction.

The material contained in this Document is for information purposes only and should not be construed as an offer or solicitation or recommendation to buy or sell financial products.

The information contained in this Document is intended to be general in nature and is not personal financial product advice. Any advice contained in the Document is general advice only and has been prepared without considering your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant disclosure statements or other offer documents prior to making an investment decision about a financial product.

Dubai: Equities First Holdings Hong Kong Ltd (DIFC Representative Office) at Gate Precinct Building 4, 6th Floor, Office 7, Dubai International Financial Centre (commercial license number CL7354) is regulated by the Dubai Financial Services Authority (“DFSA”) as a Representative Office (DFSA Firm Reference No.: F008752). All rights reserved.

The information contained in this document is intended to be general in nature, and, to the extent that it is perceived as advice, any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs.

The material contained in this document is for information purposes only and should not be construed as financial advice, including an offer or solicitation or recommendation to buy or sell financial products. The information contained in this document is intended to be general in nature and any advice contained in this document is general advice only and has been prepared without considering your objectives, financial situation, suitability of the financial products or your needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. If you do not understand the contents of this document, you should consult an authorised financial adviser.

This document relates to a financial product which is not subject to any form of regulation or approval by the DFSA. The DFSA has no responsibility for reviewing or verifying any documents in connection with this financial product. Accordingly, the DFSA has not approved this document or any other associated documents nor taken any steps to verify the information set out in this document, and has no responsibility for it.

Hong Kong: Equities First Holdings Hong Kong Limited is licensed under the Money Lenders Ordinance (Money Lender’s Licence No. 1659/2024) and to carry on the business of dealing in securities (Type 1 licence) under the Securities and Futures Ordinance (“SFO”) (CE No. BFJ407). This Document has not been reviewed by the Hong Kong Securities and Futures Commission. It is not intended as an offer to sell securities or a solicitation to buy any product managed or provided by Equities First Holdings Hong Kong Limited and is only intended for persons who qualify as Professional Investors under the SFO. This document is not directed to individuals or organizations for whom such offers or invitations would be unlawful or prohibited.

Korea: The foregoing is intended solely for sophisticated investors, professional investors or otherwise qualified investors who have sufficient knowledge and experience in entering into securities financing transactions. It is not intended for, and should not be used by, persons who do not meet those criteria.

United Kingdom: Equities First (London) Limited is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”). In the UK, this Document is only being distributed and made available to persons of the kind described in Article 19(5) (investment professionals) and Article 49(2) (high net worth companies, unincorporated associations etc.) of Part IV of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘’FPO’’) and any investment activity to which this presentation relates is only available to, and will only be engaged in with, such persons. Persons who do not have professional experience in matters relating to investment or who are not persons to whom Article 49 of the FPO applies should not rely on this document. This Document is only prepared for and available to persons who qualify as Professional Investors under the Markets in Financial Instruments Directive.