President Trump's threat of imposing 30% import tariffs is seen as a tactic to expedite negotiations with the EU. Swedish economist Robert Bergqvist warns of the devastating impact such tariffs could have on Swedish exports. While the EU maintains its negotiation strategy, the potential tariffs could violate WTO commitments, adding uncertainty to global markets.
Trump's Tariff Threats: A Strategic Move to Pressure the EU
Trump's Tariff Threats: A Strategic Move to Pressure the EU
President Trump's threat of imposing 30% import tariffs is a strategy to pressure the EU, according to Robert Bergqvist, senior economist at SEB.
– He is likely dissatisfied with the slow progress, he says.
The timing of this announcement is not surprising, as Trump had indicated a decision would be made soon, says Robert Bergqvist.
He believes this is part of Trump's usual negotiation tactic – creating uncertainty for the opposing party. By threatening 30% import tariffs, Trump hopes to expedite an agreement with the EU.
– I understand it, to some extent. The EU is not built to move quickly. The European Commission manages the negotiations, which must be coordinated with all 27 EU countries.
"Devastating"
Tariffs of 30% would be devastating for the Swedish export industry, Bergqvist believes.
– I am very concerned about the way this trade war is developing, he says.
Per Altenberg, chief economist at the National Board of Trade, suggests it is difficult to predict how the EU will respond. He believes it is likely they will stick to their current strategy.
– So far, the EU's strategy has been to negotiate, and those negotiations are still ongoing as far as I understand. But at the same time, they threaten countermeasures if those negotiations fail.
Robert Bergqvist shares this view.
– Countries that have tried to oppose this and raise their tariffs have not achieved constructive results. Especially China, but also Canada, it has been devastating, he says and continues:
– I think in this situation, Brussels will keep a cool head for a couple more weeks and simply hope to reach a conclusion by the first of August.
Trump May Reconsider
A scenario where tariffs settle around ten percent – possibly excluding certain goods – is likely, says Bergqvist. He points out that Trump has previously tended to back down from his statements when faced with negative market reactions.
Moreover, American companies and households risk paying a high price.
– All analyses conducted by us and other international organizations agree that the tariff war is something that worsens the outlook for the US economy and the global economy, he says.
Per Altenberg emphasizes that 30% tariffs would violate the US's commitments to the World Trade Organization, WTO. Whether Trump will follow through on the tariff threat is difficult to predict, he believes.
– The only consistent thing from the US right now is its unpredictability.