“I do not think that there is any economic policy from Donald Trump or Kamala Harris that will have a targeted impact on Luxembourg,” Philippe Ledent, expert economist at ING Bank in Brussels, said in an interview. Otherwise, he explained that the impact on Europe will similarly affect Luxembourg.
How would Luxembourg suffer from proposed higher tariffs?
Using the first Trump administration as guidance, Cindy Tereba, CTO & director of international affairs at the Luxembourg Chamber of Commerce, noted an impact of US tariffs on Luxembourg exports in the following sectors: machinery, pharmaceuticals and indirectly in the logistics sector.
As reciprocal tariffs were implemented, she also observed an impact on the import of consumer goods. Although she expects tariffs to be more far reaching with a second Trump administration, Tereba also expects Harris to implement her own set of tariffs.
After Germany, France and Belgium, Tereba stressed that the US is the number four country in terms of foreign trade for Luxembourg. Yet the industrial sector in Luxembourg is not only small compared to its GDP, but also much smaller than the rest of its economy compared to its neighbouring countries.
Despite its limited direct impact from tariffs, Ledent thinks that Luxembourg will also feel the pinch as its specialised products supply international firms in the Netherlands, France, Belgium but more importantly Germany, the undisputed global champion.
Moreover, Trump is expected to redirect his policies toward fossil fuel industries, which may hamper the nascent European renewable industries unless they are relocated in the US, according to Tereba.
Could rough Trump-technology relations result in relocation?
Some of Trump’s greatest media spats are with the Washington Post, owned by Jeff Bezos, the former CEO of Amazon, and with Meta, the owner of Facebook. Paperjam questioned Tereba whether Europe could not benefit for the apparent disgust of Trump for the tech industry.
The [direct] impact of Trump or Harris on the financial sector in Luxembourg will be marginal
“The tech sector is very fast and opportunistic,” she said. Companies will quickly relocate should a framework goes against their interest. For instance, she noted an important internal relocation from California to the surroundings of New York City (pharma and chips, among other industries).
Tereba thinks that it reflects the closure of certain startup banks in California and the need to get closer to Wall Street, including venture capitalists. She sees the closer geographical proximity of NY as an advantage for Europe and Luxembourg. “Further frustration with a Trump administration may make them consider looking beyond the [pound].”
Impact of Trump or Harris on the Luxembourg financial sector
“The [direct] impact of Trump or Harris on the financial sector in Luxembourg will be marginal,” stated Ledent. He thinks that the financial competition is an intra-European affair instead of a direct competition against the US exchanges or its financial sector.
Yet he warned about the dynamic of the markets. “Over the long run, the economic cycle in Luxembourg is highly correlated to the stock markets (MSCI World),” observed Ledent. He stressed that the current economic challenges are exceptionally affected by the construction sector. Consequently, he expects the gyration of stock markets to continue to have an outweighed impact on growth.
As indicated in our , Tereba thinks that the Luxembourg financial sector will likely benefit from greater trust and confidence from a Harris government, two important conditions for going ahead with investment decisions.
Developing greater ties with the US
“As a Chamber of Commerce, our role is to stay close to companies,” Tereba stated. “We understand that there is a market at stake for Luxembourg companies and we are supporting them through regular economic missions or fairs in the US to maintain commercial relationships.”
Elsewhere, Tereba thinks that using concrete cases of trans-Atlantic partnership help facilitate discussions with politicians. She cited the intention of to invest in a battery facility in Luxembourg as a springboard for the European market after Luxembourg For Finance’s LFF 2 invested €15m in the company. She believes that such a “win-win collaboration” deserves to be promoted.
Developing greater ties with China
Tereba explained that the policy towards China may drive future collaboration between Chinese banks and Luxembourg, which “brought a greater balance between the West and the East.” It was hit hard after the introduction of the Trump tariffs in its first term and then was frozen on the back of covid. “We would like to rebuild our relationship with China but we are concerned of being refrained by the US.”