Expert on Trump's Tariff Threat: EU Cannot Remain Passive

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Expert on Trump's Tariff Threat: EU Cannot Remain Passive
Photo: Ludovic Marin/AP/TT

The EU's response to Trump's tariff threats may be to increase imports from the USA. The EU cannot sit still and will have to act, says Pia Fromlet, who is a euro economist at SEB bank.

The President of the USA, Donald Trump, has announced that the USA will introduce penalty tariffs of 25 percent on products from the EU.

According to Pia Fromlet, euro economist at SEB, the EU is well prepared for Trump's protectionist policy.

I believe they have prepared themselves, and they have probably done so for a while, for Trump's return as president and that he would pursue this protectionist policy, she says.

Can Negotiate

The EU has previously promised a "firm" response to any penalty tariffs, but Pia Fromlet believes that the union will currently wait with any countermeasures.

I don't think they will act until they have actually decided and signed that tariffs will be introduced. And to begin with, they might negotiate a bit more with the USA.

The EU can, in such a negotiation, for example, offer to buy more energy, primarily natural gas, from the USA in exchange for not introducing general, broad tariffs.

Symbolic Goods

Pia Fromlet says that it is not certain that the EU will act against the USA if Donald Trump introduces specific tariffs, for example, on certain types of products. Possibly, a response could be tariffs on American imports of symbolic goods such as Harley Davidson motorcycles or American bourbon, which has been done before,

But if he goes ahead and says he will introduce general tariffs of 25 percent, I don't think the EU can sit passively, then they will probably act in response. Then the EU will not sit still, and then it will become tariffs, and then the risk of a global trade war has increased.

Creates Uncertainty

Finance Minister Elisabeth Svantesson (The Moderate Party) is currently attending the G-20 meeting in Cape Town, South Africa. She says that the issue of the USA's threat of tariffs is one of the questions dominating the discussions at the meeting.

It remains to be seen what this will lead to, but regardless, it creates enormous uncertainty in many countries, which means that companies can hold back investments, says Elisabeth Svantesson.

She does not see any uncertainty about whether the EU should act, however.

Of course, the EU should respond and do so jointly, says Svantesson.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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