Experts of the Economic Policy Foundation, Vladimir Sedalishchev and Olga Ponomareva, commented for Vzglyad business newspaper on the recent announcement by the US President Donald Trump on the introduction of new duties on goods from the European Union and Mexico from August 1.
Donald Trump announced the introduction of new duties on goods from the European Union and Mexico from August 1. The US could drag Europe into a trade war, Swedish Foreign Trade and International Cooperation Minister Benjamin Dusa said. According to experts, a tough trade war will damage both sides of the Atlantic, however, there will be a winning third party in the confrontation.
According to Vladimir Sedalishchev, "in the hypothetical scenario of a complete cessation of trade between the EU and the US, the EU would lose only 17% of its trade. The US would suffer about 13% of its trade after reallocation of trade flows due to the cessation of trade with the EU. The question remains to what extent the parties are willing to go to a state close to a complete cessation of trade.»
Goldman Sachs predicts that the Eurozone could lose up to 1.2% of its GDP by the end of 2026 due to a
Olga Ponomareva emphasized that the reorientation of European products to new markets may bring losses in the price of goods sales in new markets and additional costs on new transportation and logistics routes. In her opinion, the situation can be mitigated by a wide network of regional trade agreements. The EU is already intensifying trade negotiations with India, Australia, Indonesia, UAE and other countries that are needed to replace the American market.
Moreover, Brussels is threatening to introduce retaliatory measures to counter the US tariffs increase. The first package of such measures was approved back in the spring, but its implementation was postponed due to the beginning of negotiations and softening of the position of the United States. "Back then, the rate hike was to affect about $18 bn of imports from the US, among the goods — soybeans, beef, tobacco, cars, yachts, industrial goods. Now a new package of more than $60 bn is being discussed. With total EU imports from the US in 2024 amounting to $400 bn, the measures may affect 1/5th of all supplies," Olga Ponomareva said.
She recalled that "the EU is an important market for the US not only for the sale of products, but also for technological cooperation, including in the production of semiconductors, microchips, industrial equipment, AI development, as well as promoting standards in new innovative areas and competing with China in advanced areas. In addition, there are discussions in the EU to extend retaliatory measures to other areas, not only customs and tariff policy, but also banking, US digital and IT companies. In this case, the US interests may be more affected than in trade in goods.»
There are also winning sides in any confrontation. Experts believe that a tough trade war between the US and the EU would benefit China and emerging markets. China has long sought to occupy a niche between the U.S. and European economies, and now there is a real opportunity for it to do so.
Nevertheless, it is possible that the EU will still make concessions to the US. Firstly, its own economic losses may deter Europe from taking drastic steps. Secondly, the EU has a political interest in achieving a favorable outcome. "Interaction with the US gives the EU support in the geopolitical confrontation with Russia, as well as in putting pressure on China and in general in containing the forces of the Global South and maintaining the position of the West," Ponomareva says. Therefore, it is not excluded that the EU will strike a deal with Trump.