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The Statue of Liberty was gifted to the US by France. 

Long ago in 1295 France and Scotland formed the Auld Alliance/Vielle Alliance to fend off English expansion.  That had lessons for later as, after the US gained independence from England, a Scot named James Wilson wrote the first drafts of the US Constitution in 1787 and he was one of the signatories to the Declaration of Independence. Another Scot - Alexander Hamilton - also helped write the Constitution. Of the 47 presidents 35 have been of Scottish or Uster-Scot descent. Today's President Trump had a Scottish mother. 

The direct French connection is also important. Between 1787 and 1789 the French people led a revolution that finally freed them from tyrannical leadership and gave them independence.  In 1865 Frenchman Édouard de Laboulaye had the idea of presenting a monumental gift from the people of France - the Statue of Liberty - to the people of the United States. An ardent supporter of America, Laboulaye wished to commemorate the centennial of the Declaration of Independence as well as celebrate the close relationship between France and America. He was also motivated by the recent abolition of slavery in the U.S., which furthered America’s ideals of liberty and freedom. 

The moto on that statue says "Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!" Source - The Statue of Liberty-Ellis Island Foundation. 

Today such people are being turned away and the US is retreating behind a form of Iron Curtain by using a Tariff Curtain to keep foreign made goods out plus the president is nurturing relationships with barbaric dictators instead of with long term democratic friends in Europe who lived through such war mongering times in past centuries.  There has been weak political leadership in the US for a long time and many younger people want change but may not know that history shows the default position of societies has always been some form of autocracy. Despite his Scottish ancestry the current US president is an admirer of the tyrant leaders in Russia and China seeing in them the strong man he intends to be by reshaping democratic institutions into compliance bodies. He is even attacking America's own world leading companies. In an interview with Fox News he said “For years, the globalists, the big globalists, have been ripping off the United States, he said. “All we’re doing is getting some of it back, and we’re going to treat our country fairly.”  Since he once attacked John Deere (DE) by name one can conclude he means them and the few other US global leaders US like Caterpillar (CAT). They are mostly well respected worldwide and are excellent ambassadors for the US!  Most other countries would be proud to own such companies.  

He is hitting Canada, China and Mexico with big tariffs on their exports to the US yet those countries account for around 50% of US agriculture exports! He has virtually trashed the transatlantic alliance and is doing so with the checks and balances and institutions on which true US exceptionalism was built. 

The French influence showed again when President Trump recently likened himself to Napoleon.  Napoleon 1 was defeated by the English at the Battle of Waterloo in 1815. I doubt Trump means that Napoleon. More likely it would be Napoleon 111 who was elected legally as president of France in 1848 by a party he could manipulate and in 1851 when his term in power was due to expire he enacted a coup in the name of national security, promised he would make France great again and declared himself Emperor!  

We constantly hear talk of American "exceptionalism". That exceptionalism was the conclusion of another Frenchman - Alexis de Tocqueville - following his travels in the US in 1831 when he compared it with Great Britain and France.   Today's form of exceptionalism is actually turning away Americans according to a report in the Financial Times headed Why "Trump regime refugees" are falling in love with Madrid   taking their wealth and talents with them as, quote; "they are seeking to escape the US president".  

Those refugees take me on a tour of Europe's leading countries that might be the western world's last port of call for democracy starting with France where Americans - refugees? - are also heading in big numbers...

France 

This recent report in the Financial Times tells of "unbelievable" spending levels  of Americans in Paris where they "splurge" on luxury goods from French companies that the US has few equals to. Among those are...

- LVMH (LVMHF) a conglomerate that owns 75 prestigious brands including Louis Vuitton, Dior, Céline and Givenchy and is the world's number one in the luxury goods industry, with global sales of €84.7 billion in 2024. Since 2017 that very French company has also owned top US jeweller; very American Tiffany!   Interestingly Tiffany had an earlier connection with France; New York decorative artist Louis Comfort Tiffany. Most famous for his Tiffany table lamps he also created other art objects including his magnificent “Four Seasons” panel, for which he was awarded the Chevalier de l’Ordre National de la Légion d’honneur at the 1900 Exposition Universelle in Paris.

- Other big luxury product names include Hermès (HESAP) and Kering (PRPUF). All have been hurt by a downturn in sales to China and might be good investments now but I prefer other sectors and France has world leaders in many of those...

- Schneider Electric (SBGSF) or SU on the Paris exchange (where I own it) is the world leader in a key part of the electrical sector and has over 40% of its business in North America where the overloaded power supply system generally needs massive investment.   Tariffs will make that even more expensive!  I wrote more about Schneider and France in Paris - Europe's New Capital And A City Of Light For Investors 

- Veolia Environnement (VEOEY) or VIE on the Paris exchange where I own it is the world's number one water treatment company.  I featured it in this article  Veolia Investors Will Profit Hugely From Cleaning Up "Forever Chemicals" In Our Drinking Water And Much More

- Alstom (AOMFF) is the largest railway train maker in the US and the second largest in the world after the Chinese state owned train maker.  It contributes huge amounts to the US economy each year.  The US is cutting back on USAID soft power. France is moving in and will make a profit too!  It is lending €781m to Morocco to finance the acquisition of 18 high-speed trains from Alstom. Perhaps that is part of a French plan to copy China's Belt and Road Initiative that is widening China's influence in many parts of the world and to which the US has no answer.

- Airbus (EADSF) or AIR on the Paris exchange. Like US car makers Boeing's decline is due to bad management's lousy product quality leading to safety issues while Airbus has become the world number one in commercial passenger jets. In 2024 Airbus sold 2.3 times as many of those than once dominant Boeing!  Headed by a Frenchman it has also demonstrated leadership in cross border business collaboration something Europe needs more of.  If a chart paints a picture worth a thousand words this Financial Times one of Airbus topping Boeing's share price movement over the past five years surely does...

- Eutelsat (EUTLF) or ETL on the Paris exchange could equal Musk's satellite company Starlink based on its plans to spend over E2 bn by 2030 on low earth orbiting satellites. 

- There are also leading defence industry companies such as Thales and Safran and Airbus. They will do well given the US retreat from the European defence system.  

There are too many others to put in an article but, in short, France has many world leaders across many sectors. They are important parts of future French growth and are supported by other things that I believe will drive France forward to a key western world leader given the US retreat. These include...

- A business incubator called Station F opened in Paris in 2017 and has become the world's largest start-up campus having nurtured 7,000 businesses including two unicorns, one an AI company called Hugging Face and Alan, a health insurer. Another AI start-up called Mistral is valued at $6bn. They are supported by the French education system that produces a non stop chain of engineers.  In the past some of these leaders have had to go to the US to find venture capital to underpin their growth but that is changing despite the country's political mess. 

- France has an excellent education system nurturing nuclear and engineering as aspirational careers.  Nuclear is a no-go sector in Germany and in Britain engineering means getting your hands dirty.   

- AI. Europe lags the US and China. President Macron hopes to dilute that dominance with his E109bn AI investment plan. US company Brookfield will help that with an E20bn investment programme of its own. I wonder if President Trump will be happy about that! 

- France is a long term leader in nuclear energy and will build on that.  Around 65% of it electricity is derived from nuclear energy compared to less than 20% in the US.  Huge investments being made around the country today including R&D in new energy concepts. In Paris, there is micro nuclear reactor company NAAREA  In southern France, 35 nations are collaborating to build the world's largest tokamak, a magnetic fusion device that has been designed to prove the feasibility of fusion as a large-scale and carbon-free source of energy based on the same principle that powers our Sun and stars.  ITER ("The Way" in Latin) is one of the most ambitious energy projects in the world today.  Fusion will make most of today's electricity generating technologies obsolete by 2050, perhaps earlier. France also has nuclear weapons that could be part of a European nuclear umbrella following the US retreat. 

- Hydrogen is another important future source of clean energy and in southeastern France, Europe gets its largest hydrogen fuel cells gigafactory to date. 

- France has a super high speed rail network, one of the most extensive in the world.  It has an excellent, well maintained autoroute/interstate/motorway system. Good transportation systems aid productivity growth, something that is in decline in many Western countries due to lack of such investment. Unlike the US and many countries it also has an excellent heath care system including...

- The Rhone Alps region is a world leader in pharmaceutical/life science research.   Some in the Trump administration do not believe in vaccines! 

- France has a political leader with vision; President Macron.  Love or loath Trump he has vision too. No other large European country other than Russia (whose leader's vision Europe must defend itself against) has a leader with vision. In 2017 Macron made a speech projecting his view The only way to guarantee our future is to re-establish a sovereign, united and democratic Europe.  That is worth reading. Macron's message has been ignored by other European "leaders" and is even more valid today than 8 years ago because those "leaders" have an emptiness that has drained the vitality of their once healthy economies.   The biggest example of that can be seen in...

Germany 

Once called the Wunderkind (Wonder child) Germany has become The Sick Man of Europe. I have watched Europe's industrial heartland for fifty years from being a success example for all to an irreversible decline now. Almost a quarter of a million manufacturing jobs have been lost since early 2020 and more are going. Before that the pull out of US armed forces following the collapse of the Soviet Union in 1989 damaged some large cities that have not recovered. One example is Kaiserslautern that had been the largest "US" town outside the US due to the huge number of US military personnel and their families living there. Today it is decrepit mess. General Motors had a large factory there since 1929 making Opel brand cars but sold that in 2017 to French PSA Group (now part of French Italian company Stellantis). 

Germany led the world by building a network of autobahns/interstates/motorways in the 1930s. Lack of maintenance and new builds over several decades have left them in an overcrowded slow moving mess today. Side streets are potholed. Likewise the railway system - even high speed trains have to go slow because of the unsafe condition of the tracks. Medical doctors are in short supply because bureaucracy takes more time than doctoring meaning the healthcare system is in a mess. The school curriculum remains unchanged from the 1980s meaning many once leading manufacturing companies have long been unable to find young people with the education needed to fill today's higher tech apprenticeship programmes. Many of those companies had been driven away to the US by weak political leadership at home long before Trump came along.

Around 75% of companies are still using fax machines!  Some because it is the only reliable way to deal with government departments plus the postal system does not work. 

There are two leading start-up incubators in Munich - capital of Germany's main money making state, Bavaria - but companies emerging from there face a challenging future due to regulations, negative culture and lack of venture capital.   

Today there is supposedly a much heralded advance ahead with the easing of the debt break. That means  €500 billion in debt may be raised over the next 12 years for investment in infrastructure.  That will go towards the cost of repairs only, much more will be needed to build anything new.  €650 billion is needed for the power supply system alone .  Politically caused high costs for gas and electricity have driven many German companies away to other countries.  

The debt brake easing is a red herring anyway as that allows politicians to evade taking action on fixing Germany's main problem causers - the madhouse of bureaucracies and local governments determined to prevent anything worthwhile happening. Lack of money has never been the real problem and I doubt that new money will do anything useful until the prevent-doing-anything system is totally restructured.  

In the meantime large companies are continuing to reduce employee numbers. Thyssenkrupp, Siemens, Ford, VW and Audi are among those. Tens of thousands will lose their jobs and the multiplier effect on an economy already in recession will be big. The Economic Policy Institute calculates that for every 100 jobs lost in durable manufacturing, there are 744.1 indirect jobs lost!  The president of the Federation of German Industries recently said "Order books are empty, machines are idle and companies are looking abroad to invest". Trump's tariffs might hasten that move out.  

Germany was the main economic dynamo of the EU until around 2019! 

Perhaps nothing sums up the EU's economic situation today better than its quarterly GDP growth stats so far this decade.

Euro area quarterly GDP growth. (Trading Economics)

There is no sign of a new western world leader emerging in Germany. Money has poured out of the US recently and driven up the German DAX to record highs recently mostly via investment in weapons makers due to Trump's retreat but I shall stay away. 

Likewise from ...

Britain  

Once the undefeatable world leader, Britain has been destroying itself from within since the 1950s. In 1976 it needed an IMF rescue package and is heading that way again.

In the 1980s then Prime Minister Thatcher attacked unions in the way Trump is attacking government agencies and many companies today. In Thatcher's time the mantra that Trump uses today "the pain will lead to gain" was spun.  There was no gain - thousands of SMEs including a 100 year old one I had recently acquired were driven out of business - and the pain lives on. 

Few things work properly. She privatised the railway system to make it more efficient. Instead it got worse and now the current government will renationalise it "to make it more efficient". The healthcare has long been broken and maybe beyond mending. Car drivers have to be aware of Pothole Peril - huge holes in many roads that damage their cars and put up insurance costs. A housing crisis -  in some places, waiting lists for social housing can stretch to 55 years. 

Picture source: Alamy

Many local governments are technically bankrupt and drove their local shops out of business due to high taxes on them. The above photo is typical scene in many once nice towns.  Lower taxes would have saved things and given those governments a regular income but - politicians being politicians - the world does not work that way. 

Central government financial incentives caused mass building of ugly wind farms in lovely parts of Scotland and now the operators are being paid with more tax payers money to turn them off because no transmission lines have been built to get the electricity to the south of Britain where it is badly needed. Many state  schools have leaking roofs and failed heating systems while also being overcrowded due to lack of teachers. The government is making things worse by adding 20% to private school fees that will cause many to close so those children will be forced to go instead to those awful state schools. Crazily some 250,000 construction workers are needed to build government targets for new homes and repair infrastructure yet the national statistics office says there are 987,000 young people not in education, employment or training with 110,000 of those added in just the past 12 months.  A recent government "youth guarantee" might provide a mere 20,000 apprenticeships or other training opportunities. 

The UK is in an unfixable mess.  Many in Scotland want independence from England, perhaps they will renew the Auld Alliance with France free of the shackles of London where the politicians have even failed to maintain their own work place - the Houses of Parliament - the birthplace of representational democracy, a principal that Trump maybe destroying.  

I have one UK investment - appropriately named Renew Holdings (RNWHF) or RNWH on the London exchange. It specialises in infrastructure building and repair so should do well IF any money finally gets spent properly in Broken Britain. It's a big IF given that it is likely to take 76 years to repair those Houses of Parliament!    France recently completed the rebuilding of fire destroyed Notre Dame in five years! 

The only large European country doing ok apart from France is...

 Spain 

Spain is one of the few countries in Europe that has any GDP growth. The capital Madrid is beautifully looked after making many major cities in the US and in other European countries look decrepit. A lovely new home for those American "refugees". It has some world leading companies including clothing company Inditex whose main brand Zara is sold worldwide including in the US.

Today its politicians have no aspirations to lead the world and build a new Spanish empire. Its former empire comprised large parts of the US including President Trump's Mar-a-Lago estate.   The Spanish retreated and from there today President Trump is leading ...

The US retreat 

- President Trump has a tariff obsession. He places high emphasis on the auto industry so should see how tariffs "helped" the US big three - Ford, Chrysler and GM - back in the 1960s and 1970s when their factories in Australia were protected with 100% tariffs applied to imported cars. They did not use the opportunity to make better cars, build larger factories and export to newly growing nearby countries in Asia. They instead got lazy, turned out junk, raised their prices and made huge profits. Better quality imports from other makers took over eventually and the Big Three died as did the entire car making industry in Australia!  What is left of Chrysler is owned by French/Italian company Stellantis, Ford has stopped car making in the UK and its German company needs a €4.4bn rescue package.   Mighty GM has retreated to the US having sold its German Opel and UK Vauxhall brands also to Stellantis. 

- During the financial crisis 2008 GM and Chrysler had to be saved by the US government from bankruptcy  They had not adapted to a high cost fuel world that did not want their huge gas guzzlers. Today they are back making huge cars again (trucks) that are much too big for European roads and parking places so they don't sell so Trump puts tariffs on European car makers to fix things! His 25% tariffs on car parts and materials from Mexico and Canada will wipe out the profits of what remains of the Big Three in the US that he is trying to protect and cause big losses for BMW that has done what he wishes and built a huge car plant in South Carolina, its largest in the world. Trump wants the US to be an exporter - BMW is the largest, exporting cars valued at around $10bn per year yet he is killing their profits and US tax income from those! 

- His right hand man Musk relishes the limelight, prancing around onstage with a chainsaw to depict how he is destroying people's jobs and lives. If that leads to suicides as did Thatcher's attack in Britain mentioned above Musk should be tried for manslaughter. Among other things, mass firings of scientists means loss of critical weather and geospatial data and higher risks to people and property from natural disasters.  Science institutions in Europe and China are eager to employ the resulting refugee scientists! 

- Chainsaw attacks on government financed jobs is, at best, treating symptoms and not causes. The cause is the cancerous growth of regulations that require the employment of thousands to do legitimate work enforcing them. The proper solution would be for elected law makers to use a surgical scalpel to discriminately kill off (not modify or replace existing ones ) the probable 80% of laws that are destroying society. That would help reduce government debt that will require $1.3tn in interest payments to service by 2030 according to the Congressional Budget Office. It would also release money to fix major problems...

- US lacks exceptionalism in key matters. Like Britain and Germany US infrastructure is crumbling, the heath care system is expensive and awful, schools are failing to giving many young people the foundation on which to build a decent life. Unlike France, Spain, China and Japan that have super high speed - above 150 mph - rail networks the US has nothing that fast. What it does have is in poor shape - the Northeast Corridor is the busiest passenger railway in the whole of the US, and also its most important. Running for more than 450 miles between Washington D.C. and Boston, it’s critical to keeping a huge slice of America’s economy moving yet the line is dotted with tunnels and bridges that are more than a century old, and some are deteriorating fast. If any of them were to fail, it would be catastrophic for the nation.  Likewise the power distribution network is in a mess and some large installers complain it takes up to 14 years to get approval to build new ones. Trump threatens tariffs on imports of copper to make the cable yet getting approvals to get mining started in the US takes 12 years plus the years after before anything actually gets produced.   

-  Trump's military retreat from Europe and demands they defend themselves will reduce US weapons exports as they do so. Nato countries in Europe  more than doubled their arms imports between 2020 and 2024, with the US supplying over 64% of the total – up from 52% over the previous five-year period. He wants to increase exports to reduce the trade gap yet kicks US existing car and weapons exporters in the teeth!  His Make America Great Again mantra might instead Make Europe Great Again.  

Solutions 

- Forget tariffs, use tax incentives. Tariffs have led to child like but dangerous tit for tat reactions that achieve nothing good. I mentioned earlier how they destroyed the US car industry in Australia. Coincidentally, at around the same time Singapore chose to use tax incentives - tax holidays in return for investments in manufacturing. X amount of investment earned Y years of tax free profits on those investments.  Singapore went from being a shanty town to being the regional economic powerhouse that it is today. President Trump wants to radically change the US economy from being consumption driven with a huge trade deficit to being a manufacturing powerhouse. He does not like the EU - tax competition is anathema to the EU so won't tit for tat on that and many European companies - especially top German SMEs - that already want out will turn into an escaping tsunami. It would apply to US companies too and could be tailored to persuade them to redirect money from share buy backs to purposeful investments at home. Also important is the fact that such tax holidays cost nothing, unlike tariffs. 

- It takes a long time to build factories and consumers are nervous now about the cost of tariffs to them. Taking away that fear might encourage them to access their home equity valued at $35tn. This FT article headed The US economy trump card tells more. The word trump might be telling too. 

- Trump has also touted having a sovereign wealth fund. Successful Singapore has had one for many years. Another article from the FT has ideas how,  headed Trump should create a SWF with Fannie Mae and Freddie Mac. 

- Love him or loath him the fact remains that Trump is one of the only world leaders with both vision and energy. Macron likewise.  

Ever an optimist my conclusion is that investors could do well despite the uncertainly created by Trump. Hopefully he will listen to company doubts and consumer concerns about the cost of tariffs and realise there are only losers even if others lose more than the US. Hopefully he will read this article and see that tax incentives for companies will give him what he wants. Based on that hope I shall stick with most of my investments in the US and the only other country I see as worthwhile...

France - A New Leader Of The Western World. 

Readers ideas in comments below would add usefully to our knowledge on these happenings and concomitant investment opportunities 

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