Mexico and Canada have responded to President Trump’s tariffs by imposing a 25 percent tax on U.S. products. China is also preparing a reaction to the U.S. tariffs set to take effect next Tuesday.
The European Union may face additional tariffs on exports to the U.S., potentially raising costs for European consumers. Bert Colijn, ING’s chief economist, notes that these tariffs act as an extra tax, with companies likely passing on the costs to consumers.
Klaas Knot, head of the Dutch Central Bank, agrees, stating that the world economy has provided significant prosperity, but consumers will bear the cost of this trade conflict. There are no announced tariffs for the EU yet, but President Trump suggests they are forthcoming.
Europe, a powerful market with 400 million consumers, is prepared to remain strong and competitive. Tariffs could increase inflation, as seen in 2018 when Trump raised tariffs on washing machines.
Knot notes that a stronger dollar against the euro might boost European exports. The current U.S. tariffs are not unprecedented; previous administrations, including Biden’s, have imposed similar measures.
The EU is preparing a response should tariffs be imposed, although the situation is still under negotiation. If tariffs impact EU products, European prices may rise.
Source: NOS