USA and EU agreed on Sunday evening on American import duties of 15 percent on goods from EU – less than a week before the duty pause expires.
The agreed level is significantly lower than the broad 50 percent duties that USA's President Donald Trump threatened with in May, as well as the 30 percent he decided on before the parties agreed on a 90-day duty pause that was later extended.
It creates some predictability and avoids the worst scenario with a continued escalation of the trade conflict, says Altenberg.
Those who impose duties lose
On the other hand, it cannot be said that the agreement is "good" for Sweden's and EU's part, considering that the duties are now increased from 10 percent to 15 percent and that they were around 2.5 percent before April 3.
But compared to the alternative – a continued trade war with threats of 30 percent duties – it is better.
USA avoids countermeasures worth over 1,000 billion kronor that EU has threatened to take if no agreement was reached. The union commits itself at the same time to invest in and buy energy from USA for thousands of billions of kronor.
Who do you think comes out winning from this agreement?
I would say that it is Europeans who avoid being drawn into a trade conflict that could have created a major economic crisis, says Altenberg.
According to him, it is good for EU not to impose duties and the American duties will affect the country's own consumers and companies.
It is always the country that imposes duties that is most affected and most damaged.
Enter new era
At the same time, the agreement between the parties means that they are breaking their commitments to the World Trade Organization's (WTO) rules regarding the non-discrimination principle or equal treatment principle – i.e. that one should apply the same duties to all countries, according to Altenberg.
We are entering a completely new era, he states with reference to USA's different duty rates for different countries.
The principle has applied since 1947 with the purpose of avoiding that large and strong economies make agreements with each other and exert economic pressure on smaller countries, says Altenberg.
And that is exactly what is happening now. It was this situation that the principle was intended to prevent.
