Trump's tariffs could make Europe great inflation -related
Trump's tariffs could make Europe great inflation -related
President Donald Trump may want a new "America First" world, but in the race for the control of inflation, the United States could actually be over. This is due to the fact that Trump's planned customs incidents are expected to increase the prices in Germany while at the same time reducing inflation in Europe.
reasons for the increase in inflation in the USA
The causes of this are diverse and range from a possible increase in cheap Chinese exports to Europe to the latest increase in the euro value. In addition to the financial advantages for consumers, a lower inflation will give European politicians to to reduce the interest , If the economy needs support. In contrast, the United States could find it difficult to reduce credit costs if the largest economy in the world need a thrust.
The economic effects of Trump's tariffs
This is just an example of how Trump tries to strengthen Europe, as the economists from Nomura put it in a recent study. In Trump's customs duties, also influential prognostics of the International Monetary Fund see a probability of increasing inflation in the United States, as they are in their latest Write out view report
The main reason for the expected price increases in the USA due to the higher tariffs is that tariffs on imports are a tax, regardless of whether it is ready -made goods or parts. Already now there is Signs that some companies want to pass on customs costs to the American consumers. The Adidas CEO explained this week that the cost increases due to higher tariffs will ultimately lead to price increases in the USA.
A look at the economic consequences of the tariffs
The effects of the US tariffs, which were introduced during Trump's first term in 2018, indicate that an increase in inflation is imminent. A study from 2019, which was also made by Mary Amiti by the Federal Reserve Bank of New York, showed a "complete transfer" of these tariffs to the domestic prices.
Even non-customary companies could increase their prices. "Domestic producers increase their prices if their foreign competitors are forced to increase their prices due to higher tariffs," wrote Amiti and their co -authors.
reactions in Europe and the rest of the world
economists agree that Trump's tariffs will in all likelihood brake inflation in the EU this year and in the next in four species.
The influence of China's
One of these options is what Christine Lagarde, President of the European Central Bank, described as the likely efforts of China to transfer his exports to Europe. "That would have a dampening impact on prices," she said recently in a interview at the Washington Post live. More were more competition on the market, which leads to lower prices for consumers.
Jack Allen-Reynolds, Senior Economist at Capital Economics, said in a note in April: "Increasing competition through favorable Chinese imports could push the product prices ... And since China is currently faced with much higher tariffs than we expected, the exporters could further reduce their prices that would have been sent to the USA should. ”
The global impact of Trump's politics
Trump’s fluctuating policy has also led to a decline in the interest of the investors of US assets-including the dollar. In contrast, the euro has gained value since April 2 when Trump announced the tariffs of 10 % to almost all countries and even higher taxes on products from around 60 nations and merchant blocks, including the EU.
The euro has won more than 3 % compared to the currencies of the most important trading partner of the euro zone and is approaching the record high of April 22. A stronger currency makes imports cheaper, which usually leads to more, higher competition and thus at lower prices on the market.
preparations for the effects
In the meantime, the expectations of a decline in global economy through Trumps Zölle since April 2. reduced because traders expect a lower demand for fuels. The oil prices fell severely according to his customs announcements. Brentöl, the global benchmark, has lost 17 % in value since then.
The prices for natural gas have also dropped and have decreased more in Europe than in the United States. This could still be tightened, based on the forecasts of the World Bank this week. These assume that the prices for natural gas in the United States will increase a total of 2025, while European prices will only increase moderately this year and even fall next year.
The expectations of a weaker business growth also have another broader influence. Together with extreme uncertainty about the direction of trade policy, they inhibit the expenses of companies and affect consumers' trust in Europe. This is the fourth factor that brakes prices. Economists predict that consumers will ultimately spend less.
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