US duties of 15 percent for imports from the European Union (EU) will ultimately apply from August 7, not from August 1, because US President Donald Trump only on Thursday (31 July) signed a decree introducing new duties that affect products from tens of countries. The Belgian television station RTBF asked for experts how it affects the economies of Belgium and the EU, reports TASR newsletter.
According to the concluded agreement, duties will be 15 %for EU products. What will the consequences for European and Belgian production have? RTBF asked this question on Friday to Professor for international finances at the Catholic University in Leuven Bertrand Candelon.
In July, Trump threatened up to 30 %of the EU products, after negotiations with the President of the European Commission Ursulu von Der Leyen dragged to 15 %, However, this agreement is criticized by Europeans.
“I don’t know if we can talk about the word agreement at all, because we do not know if the US President has forced it. From August 7 we have European and Belgian companies that will be less competitive on the US market,” described the situation Candelon. He recalled that Belgium had a trade surplus with the USA 16 billion euros. In the case of the whole EU, the surplus was EUR 250 billion.
“It will reduce our production, what will have an impact on jobs and economic activity. It’s a really bad agreement,” bequeathed. He added that only the EU did not get into this situation, because Trump introduced even higher duties against Switzerland (39 %) or Brazil (50 %) and agreed with the United Kingdom to 10 %and quotas. All these countries will weaken their competitiveness in the US market.
“Europe has received a certificate that was a little less bad than the others, but we all got bad grades that Trump forced us,” explained Candelon. He stressed that this approach was questioning the entire trading system introduced after World War II.
In his words will have reverberations after the end of Trump’s era, with the biggest blow to the United States being a loss of trust, which has long been created especially between Europe and the US. “Trust disappears with this economic and business dictation,” he said. He pointed out that China is ready to take a US place in the EU’s business policy, which is already more focused on other regions of the world, which Trump seems to see, nor that the US and the new president will take many years to get back the previous position and confidence.
For Belgium, the American market is significant, it represents 8 to 10 % of its total trade and focuses mainly on the pharmaceutical, chemical and diamond sector. The pharmaceutical sector is not yet subject to any duties. In the event of their introduction, large companies can create stocks and edit margins in America, but small businesses will not be able to reduce their margins because they will go bankrupt.
Some European companies could move their production to the US to avoid duties. According to Candelon, however There are some restrictions. Investing in the US, creating a company or setting up a factory requires time, it takes five to six years. This is one of the reasons why European companies can contact other manufacturers, especially in Asia, and diversify production. According to him, the risk is that instead of the US with almost 18 % business turnover, China will become the main European business partner.
