US tariffs: Europe is spared, but the United States suffers a lot of damage!

US tariffs: Europe is spared, but the United States suffers a lot of damage!

On Wednesday, the controversial US tariffs come into force on steel and aluminum, which are 25 percent. Many fear negative effects on the European economy. However, a study by the Kiel Institute for the global economy shows that the effects on the EU are minimal. These tariffs could reduce the real GDP of the European Union by 0.02 percent at short notice, as well as Krone . The reason is that the products concerned only make up about five percent of total EU exports, of which only a small part is actually exported to the USA.

However, the negative consequences for the USA are considerable. The simulations indicate that prices increase by 0.41 percent and the inflation rate is heated. In addition, a decline in US exports of around 1.37 percent could heavily burden American industry. The excessive costs for imported steel and aluminum are expected to increase the production costs of numerous US sectors, which could lead to a competitive disadvantage on the international market. According to ifw estimates the research director for commercial policy, Julian Hinz that these protectionist measures have a symbolic effect, but could harm the economic interests of the United States.

potential for further protectionist measures

The effects of these tariffs could not only burden the US economy, but also the relationships with Canada and Mexico, states that were excluded from country-specific tariffs. For Canada, a decline in real GDP of 0.39 percent and 0.19 percent for Mexico is forecast, as a large part of their steel and aluminum exports go directly to the USA. Despite the limited direct influences on the EU, the warning remains of further protectionist measures, which is why the EU should determine the diversification of trade and strengthening economic resilience as a strategic priority.