Europe to Face Tough Battle in Trade War: Strength vs. Trump's Tactics

amsterdam - European countries are in a stronger position than America in the face of potential trade tariffs, economists say.

Europe's Strong Position

Economists argue that European countries are better positioned than America in the event of trade tariffs. Harry Garretsen, a professor of International Economics at the University of Groningen, suggests that Europe's strategy could be to respond firmly if Trump imposes import tariffs.

According to the Central Planning Bureau (CPB), 4 to 5% of Dutch exports go to the US. If a 10% import tariff is imposed, Dutch trade could decrease by 1%, whereas American exports could drop by 20% due to conflicts with multiple countries.

Trump has already imposed tariffs on products from Mexico, Canada, and China, and threatens to do the same with European trade. ING economist Bert Colijn suggests three possible responses: a symbolic response like the previous steel and aluminum conflict, a tit-for-tat approach with matching tariffs, or a conciliatory approach like Juncker's deal in 2018.

However, Garretsen warns against appeasing America, suggesting targeting American imports in agriculture, raw materials, and telecommunications as a response. While concerns are mainly on European consumers facing higher prices, the impact could extend globally.

Despite the potential indirect effects, Dutch businesses are preparing for various scenarios, closely monitoring the situation in contact with the government and the EU Commission.

Companies fear direct repercussions and the possibility of a global trade downturn due to American policies. Additional tariffs on China may flood the European market with cheap, potentially dumped Chinese products.