The Gaidar Institute experts in a commentary for the RBC publication assessed the consequences of the US introduction of new tariffs on European goods containing steel and aluminum. This decision has jeopardized the recent trade deal between the EU and the US.
Dmitry Kuznetsov, a Researcher of the International Trade Department. noted: “The deal means a de facto worsening of the terms of trade for the EU compared to the previous mode, whereby the average weighted tariffs on industrial products within the WTO constituted 3-5%. That is, European companies immediately become less competitive in the US market.”
“The EU wins against China, India and countries of Southeast Asia, if these conditions are to be compared with the US tariffs on other countries, but this advantage is offset by the lower price competitiveness of European goods,” added Olga Ponomareva, an expert at the Economic Policy Foundation.
Dmitry Kuznetsov also stressed that there was no unity within the EU regarding the deal: some countries saw it as a chance to maintain access to the market, while others, such as Germany and France, considered the conditions to be “obviously enslaving.”
Experts believe that Trump's new tariffs are not only a tool of competitive struggle, but also a way to pressure EU officials to approve the deal. Despite severe blow to European industry, a complete breakdown in relations is unlikely. According to Dmitry Kuznetsov, the US buyers will not be able to find a replacement for European equipment in some segments and will be forced to continue purchasing even including duties. Olga Ponomareva added that a return to the tariff war will result in more significant losses: "of two evils one has to choose the lesser."