The global economy is under pressure now that US President Donald Trump has announced a series of serious import duties. According to Klaas Knot, president of De Nederlandsche Bank, this step is the start of a trade war in which nobody wins, but in which Europe does have something to win.
Trumps trade war lacks every economic basis
What was presented by Trump as a victory for American industry, economists rather call a thump for global trust. The extent of the measures came unexpectedly, and economic logic is completely missing according to Knot. “If it wasn’t that serious, I would almost find it comical.”
The US looks at the trade deficit per country and converts half of that amount into import duties. Knot finds this approach “staggering simplistic”. According to him, the idea that every trade surplus is wrong is a misconception that no economist endorses. Commercial balances simply reflect the developmental stage of countries, and surpluses or shortages are completely normal.
What particularly worries is who ultimately pays the price. “During Trumps first term it turned out that it was the American consumer who got the bill.” “That will not be different this time.” And with inflation in the US still high, Knot predicts that the new taxes will only strengthen that pressure.
Dutch economy feels the blow
The exact consequences remain uncertain for the Netherlands, because it is not yet known which products are exempted. But according to DNB calculations, the damage could rise to a few tenths of a percentage point in economic growth this year. Next year that loss could even go towards one percentage point. Sectors such as steel, chemistry and food production in particular will feel the impact.
Nevertheless, Knot also sees room for strategic benefits in the current situation. According to him, the internal European market is still far from optimal. “The IMF has calculated that the barriers between EU countries are equal to an internal rate of 45 percent.” That is twice as high as the American taxes. “
If Europe knows how to break these barriers, that the Netherlands alone can produce 70 billion euros in extra economic activity. According to Knot, there is the real counter -move.
Nevertheless, he calls on the European Commission to start a conversation with Washington. Not with harsh words, but with strategic patience. “Tel to ten, keep the dialogue open.” “This is only how you prevent the situation from getting out of hand.”
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Source: https://newsbit.nl/dnb-president-kritisch-op-trumps-importheffingen-economisch-absurd/
