Brussels vs. Washington: New tariffs could trigger global market shockwaves – Expert opinions
The European Union has strongly criticized the U.S. tariff policy, warning that it will take immediate countermeasures to protect its economic interests.
"If unjustified tariffs are imposed on the EU, this will not go unanswered and will lead to decisive retaliatory measures. The EU will act to protect its economic interests. We will safeguard our workers, businesses, and consumers," said President of the European Commission Ursula von der Leyen.
News.Az reached out to experts to assess how the U.S. and the EU would be impacted if new tariffs were introduced and which sectors would be hit the hardest.
Baku-based economist Eldaniz Amirov explained that the European Union would lose more in a potential trade war:
"In trade turnover with China, Canada, and the European Union, the U.S. imports more goods. The U.S. economy literally 'eats,' 'feeds,' and 'receives.' In 2022, the trade turnover between the U.S. and the EU amounted to $1.3 trillion, with $592 billion in exports and $723 billion in imports. In other words, the U.S. had a trade deficit of $131 billion in 2022. This trend continued in subsequent years, with the deficit reaching $158 billion in 2023."
Amirov warned that such a trade conflict would have global consequences:
"Since the global economy is interconnected, international trade will suffer serious damage. This could lead to tensions in economic development, trade relations, production, and political affairs. Disrupting the global trade chain would negatively impact investment flows and the overall investment climate."
Emphasizing that Trump’s strategy does not bode well, Amirov noted that if tariffs are expanded to more countries, the U.S. itself could face isolation and severe economic damage.
Political scientist Sultan Zahidov, leading advisor at the AIR Center, echoed these concerns, stating that a trade war would have negative repercussions for global trade, the EU, and even the U.S. itself:
"The European Union is the largest trading partner of the United States. Last year, their trade turnover was close to 1.5 trillion euros. Together, the EU and the U.S. account for 30 percent of global trade. Their economic ties are so strong that any customs duties imposed on one side will inevitably affect the other."
Regarding the industries most vulnerable to the conflict, Zahidov identified steel, aluminum, and the automotive sector as the first to suffer:
"A quarter of the European Union's steel exports go to America, and tariffs on this sector will inevitably impact the EU’s broader economy. Even though the tariffs have not yet been implemented, news of them has already caused a significant drop in the stock prices of European automakers. Shares of companies such as BMW, Mercedes, Volkswagen, and Peugeot have declined. Additionally, the pharmaceutical and chemical industries will be affected, along with the food industry—Europe exports large quantities of wine, olives, and other products to the U.S. During Trump's first presidency, a 25 percent tariff was imposed on wine, cheese, and cognac. Further tariff hikes will undoubtedly hit the EU's food and agricultural sectors."
Zahidov noted that the EU could also respond with countermeasures:
"The EU may impose customs duties on American tech giants such as Apple, Alphabet, Meta, and Amazon, which would have a direct negative impact on the U.S. economy. This could lead to higher energy and business costs in the U.S. and disruptions in supply chains."
While Trump’s tariffs could generate over $100 billion annually for the U.S. budget, Zahidov warned that small businesses and middle-class Americans would bear the brunt of the economic fallout.
"If these tariffs are implemented, global trade will decline, leading to lower national currency exchange rates, rising inflation, and increased unemployment across multiple countries," he concluded.
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