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Is there a risk of a trade war between Europe, China and the United States?
The risk exists even though the real war has not begun. But the commercial aggressiveness of the United States of Donald Trump lets fear an escalation. With the economists Sébastien Jean and André Sapir, we simulated the effects of a catastrophic scenario where the customs duties would be increased to 60%. This would result in a sustained 3-4% decline in GDP in the United States, China and Europe, a shock equivalent to that of the Great Recession of 2008 and 2009. This would represent a loss of income of 1125 euros per year for each Frenchman. Contrary to what Donald Trump says, the commercial war would penalize all the economies of the world. Trade is a positive-sum game
Can escalating tariff escalation be quick?
The risk of escalation is real. International trade agreements are inherently fragile. Large countries may have an interest in unilaterally increasing tariffs to encourage the relocation of companies on their territory. As soon as a country starts to do so, the "domino effect" can be fast. We see it with the Chinese reaction to American decisions. This time, it is all the more alarming that it is the United States that triggers hostilities, that is to say the country that is behind the creation of the World Trade Organization (WTO
How can the European Union react to the American offensive?
For the moment, the European Union has chosen a firm but proportionate retaliation strategy. The European Union is right to respond with targeted tariff increases to American companies that are massively exporting to Europe. This will lead to strong lobbying of these companies in Washington to end Donald Trump's trade policy. And these lobbies are very powerful.
What do you think of the proposal for a specific negotiation on the automobile industry?
The German automobile industry is in favor of opening with the United States a specific negotiation on trade in this sector. In my opinion, a tactic of "appeasment" is not good because it would make believe the American opinion that Trump's policy succeeds. On the other hand, the European Union can make a negotiation offer to the United States on the functioning of the WTO and in particular on the place of China, the world's leading exporter of goods, which is still considered a developing country.
Should the European Union Ally with Other Countries?
The more allies there are in the response to the commercial aggression of the Trump administration, the more this response will have effects. The European Union can rely on the countries most attached to the WTO and to international agreements, such as Japan or Canada. The European Union also has an interest in maintaining and developing its bilateral agreements to ensure access to different markets in the event of the WTO breaking up.
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