All Hands on Deck: Top Economists Urge EU to Seize Trade Opportunities Amid US Tariff Strife
Increase in Harm: Experts Affirm Trump's Tariffs Cause Greater Damage to the U.S. than to the EU
Trade spats with the US have economists from Germany and France sounding the alarm. They're calling on the EU to swiftly forge fresh trade ties with different economic regions amidst the ongoing tariff tussle. In a bold statement, economists from the French Conseil d'analyse économique and the German-French Council of Economic Experts urge the EU to take charge in safeguarding the global trade order.
As the world economy keeps its doors open despite US tariffs, the hit to Europe's economy is projected to be less severe. European economies could buckle under the cost of tariffs less if the EU supports European businesses facing restricted US market access by helping them venture into new export markets and trade partners, asserts Monika Schnitzer, co-chair of the German-French Council of Economic Experts.
Tariffs: A Stubbornly Permanent Payday?
According to the German-French scholars, the basic 10% tariff from the US is likely to be a long-term affair. The anticipated negative impact on US real production ranges between 1.0% to 1.63%, while EU nations can expect a much milder hit, approximately 0.15% of their GDP. In a more grim scenario featuring higher tariffs unveiled by Trump back in April's "Liberation Day," EU countries might still weather a decline in real production, with estimates hovering between 0.22% to 0.33%.
To counterbalance the US's standoffishness, the EU is advised to utilize the 90-day suspension of US tariffs to seal the trade deal with Mercosur nations and engage in trade negotiations with other countries, the scholars propose. The EU must prepare for a potential recurrence of US tariffs and have its arsenal of potential countermeasures, such as restrictions on EU market access, regulatory measures for digital services, or counter-tariffs on US products, at the ready, Schnitzer emphasizes.
The Trade Tango: A Dance of Declines and Gains
Recent analyses shed light on the ebb and flow of the trade dance, with nuanced effects on both US and EU economies. While the US is set to profit from the tariffs via a projected net revenue gain of $1.6 trillion, US exports to the EU might suffer substantial declines if a deal isn't reached. Potential drops range from 8% to 66%. As for EU export numbers, tariffs could impact up to €26 billion of EU exports to the US, translating to a decline of between 0.6% and 1.1% without a resolution.
Macroeconomic aggregates and global value chains feel the brunt of the tariffs, with specific sectors like electronics and pharmaceuticals potentially facing future sector-specific measures. As the dance between the US and EU unfolds, economists from Germany and France urge the EU to remain agile, patient, and pragmatic in seeking fresh trade opportunities and upholding a balanced approach to trade policies.
Source: ntv.de, jpe/dpa
- Donald Trump
- USA
- EU
- Trade Conflicts
- Tariffs
- In light of the ongoing trade conflicts and tariff tussle between the EU and the US, the economists from Germany and France propose that the EU should not only strengthen its community policy but also consider employing more strategic employment policies, focusing on helping European businesses diversify their export markets and trade partners to mitigate the impacts.
- As the trade disputes stretch on and the possibility of permanent tariffs looms, it is essential for the EU to not only engage in trade negotiations with the US but also explore new business opportunities with other economic regions, such as the Mercosur nations, to avoid potential declines in export numbers and maintain a balanced approach in global politics and economics.
