New US tariffs: what can Europe do?
US President Donald Trump has announced a massive additional package of tariffs. On top of a flat rate of 10 percent on all goods imported into the US, variable tariffs set at 20 percent for the EU and 34 percent for China will apply. Europe's press debates how hard this blow will hit and how it could be countered.
Inflationary consequences
Trump's hefty tariffs will effectively amount to nothing but new taxes on Americans, La Stampa sniggers:
“And of the worst kind, at that, because they will hit the less wealthy Americans the hardest. Those with no budgetary constraints will be able to go on buying goods despite their being more expensive. But that's not all: tariffs create inflation, which is another regressive tax because it hits the needy hardest. To be fair, Trump is perfectly aware of these two consequences. Americans will feel 'some pain,' he recently had to concede. ... The point is that in order to generate revenue from the new taxes, i.e. the tariffs, demand for foreign goods must not decline.”
World trade dismantled according to plan
The Aargauer Zeitung explains the thinking behind Trump's radical trade policy measures:
“The Trump administration is acting based on the following premises: the Bretton Woods treaties and institutions have become a hindrance for the American middle class. The US no longer benefits from them, but is instead being exploited, primarily by the EU, Canada, Mexico, Japan and South Korea. In order to usher in a new 'golden era', this system must therefore be dismantled and replaced by a new one. This requires tariffs. Thanks to them, anyone who wants to benefit from the huge American consumer market will have to pay an entrance fee, so to speak. Better still, they must relocate their production to the US, thereby creating thousands of well-paid jobs.”
Structural reforms not enough
Europe must actively address its weaknesses in the face of the looming economic conflict, warn David Amiel, Member of the National Assembly for Renaissance, and economist Shahin Vallée in Le Monde:
“The so-called 'structural' reforms are essential, but they will only deliver their results in the medium term, whereas the threat is immediate. ... Without a relevant surge in investments and without European borrowing for defence and innovation - similar to during the pandemic - Europe runs the risk of being left behind definitively. ... The US will try to link the Ukraine issue with the trade issue in order to further weaken and divide us. ... Europe is just beginning to open its eyes at the security policy level - but it must not close them at the economic level.”