EU Economy Commissioner: Trump’s 10% tariffs still in place are blow to world economy
The economic outlook is getting more and more unpredictable, and is coloured by the impact of the Trump Administrations’ imposition of universal tariffs on almost the whole world, European Economy Commissioner Valdis Dombrovskis told a news conference on April 11 as the Eurogroup met.
“We welcome the 90 days pause on reciprocal tariffs above 10 per cent,” Dombrovskis said. “It creates space for negotiations.”
“However, we should not forget that the 10 per cent reciprocal tariffs remain in place for almost all countries and they represent a blow to the global economy,” he said.
Furthermore, the US has not paused its 25 per cent tariff on steel and aluminium and also the 25 per cent tariff on cars and car parts, Dombrovskis said.
He said that the nature of these rapidly moving developments makes it difficult to assess their impact on the EU’s economic outlook.
“What is clear, and what ministers in today’s meeting agreed on, is that the US itself will be the first and most hit by the tariffs,” he said.
Dombrovskis said that the imposition of tariffs will weaken the US economy by reducing consumers’ purchasing power, real wages and making imported intermediate goods for production more expensive.
Beyond the direct effects of tariffs, however, an additional loss of investor confidence in the US economy could further aggravate the negative impact on GDP, he said.
“According to our latest model simulations on the US tariff impact, US GDP would be reduced by 0.8 per cent to 1.4 per cent until 2027.”
The negative impact on the EU would be less than for the US, about 0.2 per cent of GDP, he said.
If tariffs are perceived to be permanent or if there are further countermeasures the economic consequences would be more negative: up to 3.1 per cent-3.3 per cent for the US, and 0.5 per cent-0.6 per cent for the EU and 1.2 per cent for world GDP, while global trade would decline by 7.7 per cent in three years’ time, Dombrovskis said.
“These model simulations do not account for an additional loss of investor and business confidence in the US economy, which would further the negative GDP impact, as I outlined before,” Dombrovskis said.
“Given the extraordinary uncertainty and frequently changing tariff decisions, our model simulations cannot be fully precise. But they do show the overall trend that tariffs are damaging for prosperity,” he said.
“So, let me make it clear: Europe did not start this confrontation, and Europe does not want this confrontation.”
Tariffs go against the political and economic logic of deep and longstanding transatlantic trading partnership, valued at 1.6 trillion euro in 2023, he said, adding that this is the largest trade and investment partnership in the world.
Global financial markets have already reacted badly to these developments, with massive volatility and selloffs in recent days, he said.
He said that the European Commission will continue to closely monitor financial developments in the days and weeks ahead.
“We are ready to negotiate a mutually acceptable outcome, while defending our own economic interests.
“There is no need to continue to hurt the US’ own and our economy,” he said.
Dombrovskis said that the EU was offering zero-for-zero tariffs for industrial goods.
“But of course, if needs be, we are also ready to respond with countermeasures to protect our interests, our people and our companies.”
At the same time, the EU will continue the work on deepening the EU’s Single Market, enhancing its competitiveness, and diversifying its trade with other partners, he said.
(Photo: EC Audiovisual Service)
Please support The Sofia Globe’s independent journalism by becoming a subscriber to our page on Patreon:
