The trade tensions between the EU and the US are intensifying, with President Trump’s protectionist policies signalling imminent tariffs on EU exports. Although the macroeconomic effects on the EU may seem limited, distinct vulnerabilities emerge, particularly in sectors vital to economies such as pharmaceuticals and automotives. Trump’s potential imposition of 25% tariffs specifically targets these areas, which will not affect all regions uniformly.
The uneven impacts of tariffs are particularly pronounced in Ireland’s Southern Region and Copenhagen, both of which heavily depend on the pharmaceutical industry. On the automotive front, regions in Germany like Stuttgart, Upper Bavaria, and Braunschweig face substantial risks due to their reliance on car manufacturing, compounded by the ongoing 25% tariffs on steel and aluminium imports which could disrupt supply chains and inflate production costs.
Furthermore, tariffs on automotive exports could cause ripple effects throughout various interconnected sectors across central and eastern Europe and Austria. Key logistics hubs like the Port of Hamburg and Rotterdam might also witness reduced shipping activity due to a drop in US demand, further compounding the challenges for these regions.
In the broader context, the implications of these tariffs stretch beyond the EU’s borders with potential ramifications for Asian economies as well. The new layer of tariffs on various countries, particularly China, poses additional threats to global manufacturing dynamics, exemplifying just how interconnected current trade policies have made international economies.
Trade tensions between the EU and the US are escalating with proposed tariffs by Trump, potentially impacting sectors like pharmaceuticals and automotives differently across regions. While macroeconomic effects may appear modest, significant subnational vulnerabilities exist, especially in areas like Ireland and Germany. The ripple effects could also affect logistics and supply chains across Europe and beyond.
The article highlights the nuanced and uneven risks posed by President Trump’s proposed tariffs on the EU economy, with crucial sectors such as pharmaceuticals and automotives facing significant impacts. The geographic disparities within the EU mean that certain regions, particularly in Ireland and Germany, are more vulnerable than others. As these tensions unfold, the ripple effects could extend beyond EU borders, affecting trade dynamics globally, particularly in Asia.
Original Source: www.oxfordeconomics.com
