The duties war

Translated by Alessandra Fumagalli 

The elected President Donald Trump announced the new duties tariffs that wants to impose: 60% for Chinage, and a range between 10% and 20% for the rest of the countries. Christine Lagarde, president of the European Central Bank released an interview last November 25 to the Financial Times, explaining the future acts that the European Union would make to tackle the American tariffs. 

“A trade conflict would interest anybody, neither the United States nor the European Union, but it would only lead to a GDP contraction”, stated Lagarde. Making a trade war would be dangerous for both economies, and starting a global inflation. However, the ECB president underlined that Trumps’ words suggest a negotiation opportunity, since the American president has pointed out a range of possible tariffs (10%-20%) for the European market. 

Lagarde also stated that the European Union must be ready for concessions with the United States, in order to avoid strong economic repercussions due to duties. “We could discuss the purchase of a greater quantity of natural liquefied gas from the United States”, stated, adding that the “category of goods for defence, which we are not able to produce in Europe, should be purchased at a collective level from the European Member States”. 

Also the former American president, Joe Biden, affirmed that damaging allied relations, in particular with Canada and Mexico, is counter-productive. His hope is that Trump changes his mind. 

In the past, Lagarde defined Trump as a “threat for Europe”. Nowadays, this threat has become reality: for Europe is a trade challenge with the United States, which can not be won with strength, but with diplomacy and agreements. Europe has to reawaken and adopt the necessary changes, because, meanwhile, the rest of the world has been going on, while the European Union has been steady for too long. It is important to underline that attempts to make the European market bigger, also among the European countries, have been stopped because they were not considered an “added value”. 

In conclusion, the economic offensive by the United States is a negative challenge for the European market, but it can also be seen as an opportunity to react, to understand that it is the moment to act, after a long period of silence. 

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