I don't know anything about economics, hence this post. Trump is imposing 10% tariffs on imports from some countries in the E.U. I've seen some "this is unacceptable" sentiment from Von der Leyen and some other European leaders. Why though?
U.S. imports amount to about 10% of total exports from the E.U. I can't imagine that suddenly all that 10% will disappear because of the tariffs. I can imagine that despite the tariffs, American businesses will still keep importing these goods and just trickle down the costs to the American consumer. So, couldn't E.U leaders just say "Ok, whatever, do your thing"? What could the actual damage to the European economy be because of this?
Why does the E.U. react like this to Trumps tariffs increase?
byu/feraldodo inAskEconomics
Posted by feraldodo
5 Comments
If things that are exported to US by Europe get more expensive, Americans will normally buy less of it, directly affecting the European seller / producer.
Europe already gave a bunch of concession last year and ate some tariffs. It’s unacceptable because this topic was done already making the US appear as unreliable because they keep backtracking after deals have been made.
Increased tariffs -> more expensive for American consumers -> Americans choose other options -> EU loses export market share -> anger ensues
Because we buy weapons from the US and nukes.
Also, the EU isnt a nation. Its a supranational organization thats mandate is status quo economics. There isnt an elected president of the EU that can get a mandate from the people.
It’s actively making the EU products uncompetitive in the American market. Weather customers swallow the price increase or not is up to the demand elasticity for the specific products.
Thing is, you also have to see it in a larger context. Pre-trump2 the USA-EU trade is largely tariff free and is based on an overall good relationship. Then he comes along, threatens to invade Greenland for the first time, brings out the first wave of tariffs, then settles on a second wave after some negotiation, then threatens to take Greenland again, and brings out tariffs again. All within 1 (!!!) year.
The cornerstone of international trade is trust and reliability. Trump’s version of the USA offers neither. If he wants to bring out tariffs, sure. Do it, get it over with, but then stick to it, so at least companies don’t have to redo their strategic plans.
Edit: and the thing is, Trump gives 0 confidence to anyone in the world, that any deal signed is here to stay. I’m not even sure the most recent tariff rates lasted 6 months.
This is really more of a political question than an economic one. The fact that Trump threatens countries who oppose him wanting to annex a sovereign country weighs more than the direct economic damage.