What impact will US tariffs on car imports have?
Donald Trump has made good on his threat: from the start of April the US will impose a 25 percent tariff on cars and car parts imports. With this move he hopes to generate additional revenues, strengthen the domestic car industry and create jobs by encouraging foreign carmakers to open factories in the United States. Commentators voice doubts.
Counterproductive economic policy
Trump has got his concepts back to front, economist Nathalie Janson explains in La Tribune:
“Because the US exports its currency and financial securities, it must import goods and services in exchange. The US trade deficit is less the result of a decline in the country's industry than of hyper-specialisation in the financial sector. ... It's regrettable that Donald Trump doesn't understand that the US trade deficit is a prerequisite for the US to become 'great again'. It allows American consumers to purchase a wide variety of goods and services at top prices, and provides an inexhaustible source of financing for innovations that are key to boosting productivity and growth. Don't kill the goose that lays the golden eggs!”
US consumers will suffer
This could well backfire, warns La Repubblica:
“Many experts are sceptical about the outcome, even if Trump already sees success as a given ('companies are already looking for sites') and has received investment commitments from some companies including Hyundai. But this measure risks jacking up prices for American consumers by several thousand dollars per vehicle and disrupting the complex international production chains that manufacturers have built up over the years, including American ones, and which make it hard to define what a car 'Made in the US' actually is: 60 percent of the parts of a car assembled in America come from abroad.”
Trump's swords are losing their edge
Der Standard has harsh words for Trump's tariff offensive:
“It's completely excessive. And it's stupid. No one will be spared the ill effects of this trade war - and for once all the experts are unanimous on that. ... The world is no longer willing to sit idly by and swallow Trump's blackmailing. ... Investors are already opting to put their money in Europe. Wall Street has performed significantly worse than Europe's stock markets so far this year. Among other things, this is a result of Trump's erratic economic and trade policy. Experts fear a dip in growth. Europe, on the other hand, seems more predictable - not least because billions are expected to flow into infrastructure and defence. At some point even Trump's sharpest swords will grow blunt.”
Europe needs to diversify on trade partners
Der Spiegel explains its concept for Europe's defence:
“The Europeans should strengthen relations with other American countries, Mexico and Canada, for example, against whom Washington is also waging a trade war. And they should not be frightened when the rabid guy in the White House threatens to retaliate. Equally important is to speed up the ongoing talks on further EU trade agreements with the Mercosur states of South America, with Indonesia and with India. The easier it is for Europeans to channel their goods to the emerging markets of the Global South, the easier it will be for them to cope with the slump in US business.”
China not the solution
Ramón Pacheco Pardo, a professor of international relations, explains in El País why China will not step in to replace the US as a trading partner:
“Chinese consumers prefer to buy domestic products. ... In addition there are economic problems. ... The annual growth rate is estimated at five percent, a far cry from the ten percent of 20 years ago. ... The Chinese government wants its companies to focus on boosting the domestic economy. This negatively impacts the potential for Chinese investments in Europe. ... China will continue to be important for Europe. But it will not replace the US as a trade and investment partner.”
Focus on our own industry
Europe should not give in to panic, De Volkskrant counsels:
“Since Trump took office, the key economic indicators have fallen. Europe can therefore only hope that the tide will turn. Trump wants to use American power to the max to make his country as strong as possible. But if more and more countries turn away from the US economically and politically because of Trump's unpredictable, autocratic traits, the US's power will actually shrink. Instead of thinking about how to react to Trump, Europe would do better to focus on its own industry and economy and consider how it can make them fit for the future.”