The 30% tax on European products, brandished as the American president Donald Trump threatened, would constitute, if applied, a real upheaval for Europe. It would destroy whole sections of transatlantic trade and forced the continent to review in depth its economic model focused on exports.
European ministers gathered in Brussels Monday remained convinced that they could bring Trump to reason before the deadline of August 1, and to lead to an agreement that would preserve most of the $ 1,700 billion in annual exchanges between the two blocks.
However, Trump’s mood reversals with regard to the European Union-sometimes qualified as an ally, sometimes accused of having been designed to destroy the United States-maintain the threat of a 30% real tax for the moment.
“It will be almost impossible to continue trade as we know them in the transatlantic relationship,” said European Commerce Commissioner, Maros Sefcovic, about a 30%rate, before meeting the ministers and officials of the 27 EU capitals to take stock.
“In practice, this amounts to banning trade. »»
European officials hoped to limit damage by negotiating a basic rate around 10% – that currently in force – with exemptions for key sectors such as automotive.
Last year, the United States represented a fifth of all EU exports, making its first trading partner. What irritates Trump is the American trade deficit of $ 235 billion on goods, even if the United States recorded a surplus on services.
A shock for economic policies
The impact of this tax, which would make European exports – from pharmaceutical products to cars, including machines or wine – too expensive for American consumers, would be immediate and concrete.
Barclays economists believe that an average effective rate of 35% on European products, including reciprocity and sectoral duties, combined with a 10% response of Brussels, would lower the growth of the euro zone by 0.7 percentage.
Such a decline would absorb most of the meager growth in the euro zone and would probably push the European Central Bank to further lower its deposit rate, currently to 2%.
“Inflation would risk moving further and more sustainably from the target of 2%, encouraging a more accommodating monetary policy – the deposit rate could reach 1% by March 2026,” said Barclays economists.
A previous estimate of the German Economic Institute IW is the impact of customs duties ranging from 20% to 50% to more than 200 billion euros in losses for the German economy (4,300 billion euros) by 2028.
Although relatively low in percentage, this loss of activity could nevertheless compromise the projects of Chancellor Friedrich Merz, who wishes to lower taxes and invest in the renovation of infrastructure long neglected.
“We should postpone a large part of our economic policy efforts, as it would disrupt everything and touch the German export industry,” said Merz this weekend about a 30%rate.
Impasse for Europe
In the longer term, the question arises as to Europe will compensate for this loss of activity to generate the tax revenues and the jobs necessary for its ambitions, whether it is a question of taking care of the aging of the population or of finance the military reset.
Within the framework of its commercial diversification policy, the EU certainly concluded preliminary agreements with new partners, but-as the persistent delay shows in the finalization of the giant UE-Mercosur agreement-it struggles to fully materialize them.
“The EU has no other markets to turn and sell,” said Varg Folkman, analyst at the European Policy Center, about the complexity and duration of conventional commercial negotiations. Some observers believe that the standoff with Trump may be the shock necessary to complete the long -awaited reforms on the single market, stimulate domestic demand and rebalance an economy too dependent on exports, which represent almost half of the GDP.
The International Monetary Fund estimates that EU’s internal barriers to the free movement of activities equivalent to customs duties of 44% on goods and 110% on services. The reforms envisaged, such as the creation of more free cross -border capital markets, have hardly progressed in more than a decade.
“It’s easier to say than to do. There is no agreement to deepen. Barriers are imposed by the Member States themselves to protect their interests, ”explains Folkman about the entanglement of national regulations.
How all of this will influence the EU negotiation strategy in the next three weeks remains to be seen. For the time being, the block maintains its position: it remains open to dialogue while preparing retaliatory measures in the event of failure of the discussions.
One element could, however, encourage Trump to conclude an agreement, suggest certain European observers: persistent uncertainty alone could delay the drop in interest rates of the federal reserve, which the American president wishes ardently.
“The latest developments in the trade war suggest that it will take more time to identify the ‘landing zone’ on customs duties … which, of course, increases uncertainty for everyone, including the Fed,” analyzes Gilles Moec, AXA chief economist.
“With this new salvo … It becomes even more difficult to justify a rapid softening. »»
(Additional report by Christoph Steitz in Berlin; writing of Mark John; edition by Hugh Lawson)
