he Port of Los Angeles. Image credit: NOAA.
In his 2026 Davos address, President Trump argued that Europe’s economic stagnation is the result of a self-inflicted “civilizational erasure” driven by reliance on what he calls the “Green New Scam,” which he says has replaced affordable energy with costly and unreliable wind power.
He further asserted that unchecked mass migration has strained social infrastructure and altered the continent’s cultural identity, while a stifling regulatory environment and excessive government spending have suppressed the innovation needed to compete with the United States.
Finally, he accused European nations of freeloading on American security, arguing that their failure to meet NATO defense spending targets over the past 70 years has allowed them to avoid the true costs of national sovereignty at the expense of the American taxpayer.
Based on current economic data as of January 2026, the comparison supports Trump’s critique. While the United States is experiencing aggressive growth alongside widespread deregulation, Europe remains mired in what can best be described as stabilized stagnation.
The United States enters 2026 with inflation at 2.7%, steadily returning toward the 2% target. As in President Trump’s first term, strong GDP growth has been paired with relatively modest inflation. Fourth-quarter GDP growth is projected at 5.4%, dwarfing Europe’s stagnant 0.2%. For the full year, U.S. growth is expected to reach between 4.3% and 5%, while Europe is projected to manage only about 1.3% to 1.6%.
On the labor front, the United States maintains its historical advantage, with unemployment at 4.4% compared to 6.3% in the Eurozone. This low level of unemployment has been achieved despite deep government job cuts that reduced taxpayer costs.
While the United States reduced federal spending by $100 billion, European fiscal policy has moved in the opposite direction. The U.S. has moved 1.2 million people off food stamps, while European social safety nets are coming under increased strain from rising living costs.
In 2024, the most recent data available, EU social protection spending rose by 7%, far outpacing nominal GDP growth. This imbalance pushed the social expenditure-to-GDP ratio to 27.3% across the bloc, with countries such as France and Austria exceeding 31%, reinforcing the strain caused by rising demand for social welfare.
The U.S. now has a 129-to-1 deregulation ratio, compared to Europe, where regulation continues to increase. The European Commission’s own Competitiveness Compass estimates that new sustainability and digital reporting requirements will impose $9.18 billion (€8.6 billion) in recurring administrative costs on EU firms. In 2025, the United States finalized only five significant new federal mandates, while the EU advanced full implementation of the AI Act and the Corporate Sustainability Reporting Directive, affecting more than 50,000 companies.
Tax policy has become a primary driver of capital flight from Europe to the United States. The One Big Beautiful Bill Act institutionalized the largest tax cuts in history, including 100% expensing for capital investments. This has helped the U.S. secure $7 trillion in foreign direct investment, with estimates of committed new FDI ranging from $18 trillion to $20 trillion. By contrast, EU FDI inflows in 2025 totaled only $239 billion, up 56% from $153 billion in 2024.
The United States is performing better in energy independence and trade balance, with self-sufficiency above 100% and net exporter status that reduces vulnerability to global disruptions, generates an estimated $200–250 billion annual energy trade surplus, and provides strategic leverage through LNG exports to Europe. Europe lags with roughly 42% self-sufficiency and 58% import dependency, resulting in higher costs, greater supply risks, and weaker economic resilience, despite faster progress in renewables.
Energy remains far cheaper in the United States, particularly electricity and natural gas, due to abundant domestic production, lower taxes and levies, and reduced reliance on imports, with overall prices about half of Europe’s and industrial electricity often as little as one-third.
Europe’s trade surplus with the United States fell 50% from the tariff-driven frontloading spike in the first quarter to the third quarter, with the full-year 2025 surplus projected to be 5% to 10% lower than in 2024.
Apart from the economy, the United States has excelled in border and immigration enforcement. Under President Trump’s second term, the U.S. border is the most secure it has been in decades, with 237,565 illegal aliens apprehended and zero released into the country. Additionally, nearly three million illegal aliens have left the country, including 2.2 million voluntary departures and 675,000 involuntary deportations.
Europe, by contrast, admitted an additional 155,000 illegal migrants during the same period, contributing to rising crime rates and increasing social expenditures tied to migrant benefits.
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