US President Donald Trump has hinted the European Union (EU) could be next to face tariffs.
The European Union (EU), however, has strongly criticized the U.S. tariff policy, stating that it will immediately take countermeasures to protect its economic interests.
"If unjustified tariffs are imposed on the EU, this will not go unanswered and will lead to decisive retaliatory measures. The EU will act to protect its economic interests. We will safeguard our workers, businesses, and consumers," said President of the European Commission Ursula von der Leyen.
How will the US and the EU be impacted if new tariffs are introduced? Which sectors will be hit the hardest?
British political scientist Neil Watson in an interview with APA, stated that Trump's tariff policy is very ill-advised and counterproductive, resulting in scarcity of raw materials in the US, as indigenous metals are insufficient, leading to increased manufacturing and ultimately product costs: "Shortages of raw materials and uncompetitive US products on the world stage could lead US businesses to go bust, resulting in mass unemployment and an economic downturn."
The EU will turn to other markets
Mr Neil noted that the impacts on the EU could also be huge – the US manufacturing powerhouse is a major client for EU steel and aluminum: "So it will seek other markets, particularly in the Far East and China, in particular, and also with the Gulf, which has strong links with the EU. They will benefit from reduced raw materials costs, leading their products to become more competitive internationally, thereby exacerbating the uncompetitive nature of US-made products. Ursula von der Leyen has also hinted that reciprocal tariffs on US-made products can be expected, as was the case with a similar situation during the first Trump Administration in 2018.
Trump's decision could mark the end of manufacturing in the U.S.
Addressing which industries would be most affected if the decision takes effect, Neil Watson said the heavy mining, extraction, smelting, metals processing industries, logistics, and related industries across the EU will be detrimentally impacted as the adjustments to the client base are made.
"I believe this could signal the end of US manufacturing, as it will be deemed as uncompetitive on every level, thereby particularly playing into the hands of the Far East. Indeed, this is a New Year’s gift for China. The economies of the EU will be temporarily destabilized, but ultimately their new clients will be more stable and expanding. US protectionism will backfire, and the US people will have to suffer the consequences"
Political scientist, PhD in political science Matin Mammadli told APA that Trump's imposition of new tariffs on the EU could have a serious impact, first of all, on the coal and aluminum industries of the European Union countries: "The additional customs duties that Trump will impose on some products of the European Union may affect not only the European Union countries, but also the US economy. It should be taken into account that in terms of trade turnover, the European Union has a deficit in some areas, and the US in some areas. Therefore, I believe that in terms of technological services and technological products, the EU has a deficit in trade turnover with the US, and the European Union is primarily imposing additional customs duties on this area."
The world's largest trade turnover is between the EU and the US
"Overall, I believe that the trade turnover between the two sides can be considered the world's largest trade turnover. According to 2023 statistics, this trade turnover was over one trillion. That is, we are talking about trade relations between parties with a fairly large trade turnover. This trade war could seriously affect the economies of both sides," M. Mammadli added.
According to the commentator, this economic war can be considered the beginning of an era of protectionism on a global scale in a certain sense: “Because when Donald Trump talks about the sanctions he has imposed not only on the European Union, but also on other countries, he usually explains it as protecting the rights and interests of American manufacturers. He believes that by making these decisions, the United States can become a richer country. But I think that these decisions can also be viewed as a return to the era of protectionism as a whole.”
Who will be most affected by Trump's new tariff policy?
"The United States has the largest economy in the world, and the economic steps taken by this country, of course, have and will have a significant impact on the world economy. Overall, I believe that if Donald Trump gradually expands his policy of increasing customs duties, this will lead to a decrease in the world economy as a whole, world trade turnover and trade turnover between countries. And it will lead to a decrease not only in the trade turnover of countries, but also in the GDP of countries. Since trade barriers between countries have been significantly reduced in recent decades, trade turnover has expanded significantly. At such a time, returning to a strict tariff policy will seriously affect the world economy as a whole."
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