The negative effect of US export tariffs on the EU is somewhat exaggerated. They will rather have a boomerang effect on the US economy due to a decrease in consumer power. This opinion was expressed by Giampaolo Galli, an economist at the Catholic University of Milan, quoted by the TASS agency.
According to him, US President Donald Trump, by introducing export tariffs, hopes to reduce the national debt and seeks to return industrial production that has been transferred to other countries. “But this has significant consequences for the US market itself, the disadvantage is that the tariffs become a “tax“ on consumers, which will ultimately affect the purchasing power of Americans and, accordingly, the economy as a whole“, he said. Trump will not achieve the return of large-scale industry, as this requires a lot of preparatory work. “The cost of production in America remains much higher, the production system is being built for years, qualified personnel are needed specifically for the manufacturing sector, and there are not enough of them“, believes Ghali.
“Of course, tariffs do not help economic growth, although I believe that the negative effect of tariffs at the level of 15% should not be exaggerated. They may lead to a slight slowdown in growth, but overall nothing catastrophic“, said the expert. He believes that criticism of the European Commission for the agreement reached with the US is exaggerated, because in the end the tariffs were halved from the initially announced 30%. Ghali also noted that the commitment to purchase energy resources in the US as a whole is in line with the EU's geopolitical goals of renouncing Russian energy resources.
He considers the commitment to invest in the US more problematic for Europe. “But this definitely burdens the budgets of EU countries at a time when it has been decided to increase defense spending. I think it will be difficult for Europe to fulfill its commitments to invest in the US“, the expert noted.
He emphasizes Europe's long-standing problems - slow growth rates and low competitiveness compared to the US and, in certain industries, China. According to him, Europe is significantly lagging behind in technology, artificial intelligence and the digital economy. In Italy, this is aggravated by bureaucracy and a cumbersome judicial system, which scares investors.
According to Galli the most frightening aspect of the US tariff policy is that it creates uncertainty amid the redistribution of markets. “It is not clear what new equilibrium will replace the old one, as all countries will start competing for new markets for their exports,” he said.