Trump’s $500bn ‘Stargate’ AI Plan and Its Global Economic Ripple Effects

Donald Trump’s arrival at the White House has brought significant shifts to global trade and economic policies. Among the most notable changes are proposed increases in tariffs on European imports, which threaten to disrupt key industries across the continent. These measures, aimed at protecting U.S. industries and boosting domestic growth, pose challenges for Europe’s fragile economy. However, certain European companies, particularly global leaders with strong international exposure, stand out as exceptions. Their presence in the U.S. and ability to generate significant revenue beyond Europe position them to withstand these challenges and, in some cases, capitalize on global economic shifts. At the same time, Trump’s ambitious ‘Stargate’ Plan—a $500 billion investment in artificial intelligence and infrastructure—has sparked a new wave of optimism into U.S. markets and select global sectors. This article examines the wide-ranging economic impacts of these policies, shedding light on both the opportunities they offer and the challenges they pose.

Trump’s Economic Policies and Trade Tensions

Among Trump’s key initiatives is the potential increased tariffs on imports from Europe, with widespread increases expected across various sectors. These tariffs aim to protect U.S. industries and pressure trading partners to purchase more American goods, such as oil and gas. By reinforcing protectionist policies, President Trump seeks to prioritize domestic growth while reshaping international trade dynamics.

At the Davos forum, he made the following remarks to “every business in the world”: “Come make your product in America, and we will give you among the lowest taxes of any nation on Earth. Under the Trump administration, there will be no better place on Earth to create jobs, build factories, or grow a company than right here in the good old USA.” A simple message, but perfectly clear.

The ‘Stargate’ Plan and Its Economic Impact

Announced on January 21, 2025, the ‘Stargate’ Plan focuses on building massive data centres in the U.S. to support AI development. Companies like Nvidia (NVDA) and Oracle (ORCL) are set to equip these facilities, with ongoing projects already underway in Texas. Oracle and Nvidia stocks soared by 14% and 3.6% this week. The initiative is expected to create over 100,000 jobs and significantly boost the U.S. economy.

AI’s energy-intensive nature has also revived interest in nuclear energy, the only scalable green energy source capable of meeting the enormous demand. This has led to a surge in the nuclear sector, with key players like General Electric (GE) and Westinghouse (WAB) seeing stock increases of 7.6% and 3.56% respectively over the week.

European Beneficiaries of the ‘Stargate’ Plan

While Trump’s policies may strain trade relations, certain European companies stand out as global leaders poised to benefit indirectly from the ‘Stargate’ Plan’s focus on infrastructure and technology:

• Legrand (LR): A global leader in electrical and digital building infrastructure, generates 85% of its revenue outside Europe. This week, its stock rose by 5.55% reflecting optimism around its strong positioning in electrification projects.
• Schneider Electric (SU): Specializing in energy management and automation, Schneider is uniquely positioned to benefit from increased demand for energy-efficient solutions. The company’s stock gained 4.52% this week, driven by its global expertise in energy systems.

These companies, while exceptional in their resilience, remain outliers. For Europe as a whole, the increased tariffs and strained trade relations could exacerbate existing economic challenges, particularly for nations like France and Germany. The broader impact on Europe is likely to be negative, with limited opportunities for growth in key industries.

Luxury Sector Resilience

Separately, European luxury giants like Hermès (RMS), LVMH (MC), and Kering (KER) continue to outperform thanks to their strong international presence, particularly in the U.S.. This week, Hermès gained 6.91%, LVMH rose 6.38%, and Kering climbed 6.43%, in the wake of Burberry’s better-than-expected quarter. The British luxury house reported a robust performance in the U.S.. Sales in the Americas rose 4% but fell 2% in Europe. Even if these companies are not directly impacted by the ‘Stargate’ Plan, their exposure to the U.S. market could underscore their resilience amid global uncertainties.

Challenging European Outlook with Pockets of Strength

Despite the boost to certain sectors, Europe’s overall economic outlook remains bleak. With growth stagnating in France and Germany, many European economies face significant challenges. However, global leaders like those in luxury, industrials, energy, and infrastructure demonstrate that strong international diversification and key market positions can mitigate regional economic risks and drive success.

ETF Performances Reflect Weekly Market Momentum

Eurozone ETFs saw weekly gains (+1.37%), with France leading at +2.84%, followed by Germany at +2.09%. Key ETFs like the iShares Core DAX UCITS ETF (DAXEX) and the Amundi CAC 40 UCITS ETF (CAC) mirrored these gains, both rising +2.35%. Industrial ETFs posted modest gains, up +0.75%, but the iShares MSCI Europe Industrials Sector ETF (ESIN) outperformed significantly, gaining +2.86%. Nuclear energy ETF dominated with a +5.88% weekly rise, driven by the Global X Uranium UCITS ETF (URNG) soaring +8.59%, reflecting the theme’s growing momentum.

Here’s a comparison between Europe ETFs

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.