Taking the Lead in Global Trade: EU Economists Push for New Trade Deals Amid US Tariff Dispute
U.S. Economists Argue Trump's Tariffs Foster Greater Harm Upon America Than Europe
In the face of the trade conflict with the US, economists are urging the EU to take a proactive stance. They believe the union should quickly forge new trade agreements with other economic regions as the US tariffs are expected to hit the American economy harder than the European one.
Economists from Germany and France are advocating for the EU to "take a leading role in defending global trade order." This call to action comes from the Franco-German Council of Economic Experts and the French Conseil d'analyse économique.
Politics, Trade, and the Global Economy
The more the global economy remains open despite US tariffs, the lower the costs of tariffs for European economies will be. Monika Schnitzer, co-chair of the Franco-German Council of Economic Experts, insists that the EU should support affected European companies in finding new export markets and trading partners.
The Permanent Impact of Basic Tariffs
The Franco-German economists predict that the ten percent basic tariff imposed by the US is likely to be permanent. They estimate that the real production loss for the US will range from 1.0 to 1.63 percent, significantly higher than for the EU which may face a meager 0.15 percent of GDP impact.
In a more aggressive scenario involving higher tariffs, the EU's real production loss would be between 0.22 and 0.33 percent. The EU should make the most of the 90-day suspension of certain US tariffs to sign the trade agreement with the Mercosur countries and advance trade agreements with other nations, the economists advise.
Preparing for Countermeasures
Schnitzer emphasizes the need for the EU to prepare decisive countermeasures in case the US reactivates the threatened and currently suspended reciprocal tariffs. Potential countermeasures might include access restrictions to the EU market, regulatory measures on digital services, and counter-tariffs on US products.
Economist Gabriel Felbermayr has also called for more free trade agreements, pointing to the near-completion of the Mercosur agreement and the advanced status of negotiations with India and Australia.
Sources: ntv.de, jpe/dpa
- Donald Trump
- USA
- EU
- Trade Conflicts
- Tariffs
Insights:
- Global Trade Impact: The US tariffs are estimated to cause significant real output losses for the US, while the EU's impact is relatively mild.
- Sectoral Effects: Certain EU industries, such as the German car industry and the French transportation equipment sector, could face significant losses, while sectors like electrical equipment and textiles may potentially benefit from China's decreased competitiveness in the US market.
- Free Trade Agreements: The EU is urged to push for new trade agreements as a means of mitigating the effects of US tariffs. Economists also call for the completion of the Mercosur agreement and further negotiations with India and Australia.
- The economists from Germany and France have recommended that the EU should proactively defend global trade order by pursuing new trade agreements with other economic regions, given the permanent basic tariffs imposed by the US and the anticipated impact on the American economy.
- In light of the US trade conflict and the potential need for countermeasures, the EU should take a leading role in pushing for free trade agreements, such as the completion of the Mercosur agreement and the advanced negotiations with India and Australia, to mitigate the effects of US tariffs and protect affected European industries.
