There could be a transatlantic trade war on the way. The European Commission has responded with similar measures, targeting a variety of US products. But what does this mean for ordinary Europeans?
The ghosts of the Transatlantic Trade War appear again in the US and the EU. On March 12, the US applied a 25% tariff on steel and aluminum imports, and the EU responded with measures.
In her statement, the Ursula von der Reyen Commission stressed that tariffs are “bad for business and bad for consumers.”
Euronows tried to find out why.
Brussels-based economist Vasilios Pusalas, an expert in DeHavilland Europe, claimed that tariffs would not bring any profits based on economic orthodox.
“Tax policy affects the means of production. So, when it comes to reserves, natural reserves such as steel and aluminum will ultimately affect production machines at the European Union level,” he told Euronows.
“However, we are not particularly sure whether these tariffs will involve additional policies from EU institutions.
Research shows tariffs will first strike the US
The latest study from the German think tank Kiel Institute shows that tariffs raised by the US in the European Union hurt the US in terms of inflation, employment and growth levels, first and foremost.
But what about European citizens?
“The impact on European citizens is unpredictable at this time as there are different channels about how tariffs will ultimately affect citizens,” Psarras said, adding that citizens can switch consumption to domestic goods when imported items rise in prices.
“But there are two very serious issues to consider, which will be financial and financial market responses.”
Are Europeans adequate options?
But if some products are too expensive, can EU citizens find alternatives?
Psarras believes that the EU can replace most American products such as electric vehicles, if not all.
“We saw that Tesla sales not only plummet, but it is one of the most intense and complete AI tools used. Chat GPT could actually be replaced by French alternative Mistral AI. Even with Google as an exception, I think the search engine, a huge majority, would actually be replaced.”
“What we cannot replace is the US domination of the financial system, particularly the capital markets.”
The US recession with global effects is now a possible scenario
Analysts say the EU relies on the US financial system. The EU is not affected by its outcome, so the possibility of a recession in the US could have an impact on the European economy.
Psarras does not rule out the US recession scenario with global impacts.
“We are still unsure of what will happen to us and, as a result, international growth, as more and more analysts are now discussing the outlook for the US recession. Even Donald Trump said that even his recent state of affairs could get worse before things get better.
Psarras explained that although the EU has responded more effectively to global crises in the past, it is still fairly unprepared to deal with a massive global recession, and this needs to change.
