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The Port of Los Angeles. Image credit: NOAA.
In his 2026 Davos address, President Trump contended that Europe’s economic stagnation stems from a self-imposed “civilizational erasure” linked to the so-called “Green New Scam,” which he claims has substituted affordable energy with expensive and unreliable wind power.
Trump further claimed that unchecked mass migration has burdened social infrastructure and transformed the continent’s cultural identity. He criticized the regulatory environment and excessive government spending for hindering innovation necessary to compete with the United States.
Additionally, he accused European nations of relying on American security, highlighting their failure to meet NATO defense spending targets over the past 70 years, which he argues has allowed them to evade the true costs of national sovereignty at the expense of U.S. taxpayers.
Current economic data as of January 2026 appears to support Trump’s assertions. While the United States enjoys robust growth alongside deregulation, Europe is stuck in what can only be described as stabilized stagnation.
The U.S. enters 2026 with an inflation rate of 2.7%, moving steadily toward the 2% target. Similar to Trump’s first term, strong GDP growth accompanies relatively modest inflation. Fourth-quarter GDP growth is anticipated at 5.4%, significantly outpacing Europe’s stagnant 0.2%. For the entire year, U.S. growth is expected to be between 4.3% and 5%, while Europe is projected to achieve only about 1.3% to 1.6%.
On the labor front, the U.S. maintains its historical advantage, with an unemployment rate of 4.4% compared to 6.3% in the Eurozone. This low unemployment has been reached despite substantial government job cuts that reduced taxpayer burdens.
While the U.S. cut federal spending by $100 billion, European fiscal policy has taken the opposite direction. The U.S. has transitioned 1.2 million individuals off food stamps, whereas European social safety nets are increasingly strained by rising living costs.
As of 2024, the latest available data shows EU social protection spending increased by 7%, greatly surpassing nominal GDP growth. This disparity has pushed the social expenditure-to-GDP ratio to 27.3% across the bloc, with nations like France and Austria exceeding 31%, highlighting the strain from escalating demand for social welfare.
The U.S. currently has a deregulation ratio of 129-to-1 compared to Europe, where regulations continue to grow. The European Commission’s Competitiveness Compass estimates that new sustainability and digital reporting requirements will impose $9.18 billion (€8.6 billion) in recurring administrative costs on EU companies. In 2025, the U.S. finalized only five significant new federal mandates, whereas the EU moved forward with the full implementation of the AI Act and the Corporate Sustainability Reporting Directive, impacting over 50,000 firms.
Tax policy has emerged as a key factor driving capital flight from Europe to the United States. The One Big Beautiful Bill Act established historic tax cuts, including 100% expensing for capital investments. This has helped the U.S. attract $7 trillion in foreign direct investment (FDI), with estimates of future FDI commitments ranging from $18 trillion to $20 trillion. In contrast, EU FDI inflows in 2025 reached only $239 billion, a 56% increase from $153 billion in 2024.
The United States excels in energy independence and trade balance, boasting self-sufficiency above 100% and net exporter status, which mitigates vulnerability to global disruptions and generates an estimated $200–250 billion annual energy trade surplus. This provides strategic leverage through LNG exports to Europe. Conversely, Europe has about 42% self-sufficiency and 58% import dependency, leading to higher costs, greater supply risks, and reduced economic resilience, despite quicker advancements in renewables.
Energy costs are significantly lower in the United States, particularly for electricity and natural gas, due to abundant domestic production, lower taxes and levies, and reduced reliance on imports, with overall prices approximately half that of Europe and industrial electricity sometimes as low as one-third.
Europe’s trade surplus with the United States decreased by 50% from the tariff-driven frontloading spike in the first quarter to the third quarter, with the projected full-year 2025 surplus expected to be 5% to 10% lower than in 2024.
Apart from economic factors, the U.S. has also shown strength in border and immigration enforcement. Under President Trump’s second term, the U.S. border has become the most secure it has been in decades, with 237,565 illegal immigrants apprehended and none released into the country. Additionally, nearly three million illegal immigrants have departed, including 2.2 million voluntary departures and 675,000 involuntary deportations.
In contrast, Europe admitted an additional 155,000 illegal migrants during the same timeframe, contributing to rising crime rates and increased social expenditures related to migrant benefits.
