European Central Bank policymakers have warned that a potential trade war is on the horizon due to incoming US protectionist policies.
The news is part of a Reuters report on the emerging European banking and trade landscape following the 2024 United States Presidential Elections.
Robert Holzmann, the chief of the Austrian central bank, was vocal about the impact of the policies if they were implemented with the proposed rates. He was concerned that they could hike U.S. interest rates and spark higher inflation.
“He means what he has said and he (President Trump) will probably implement it faster than we expect. If so, what do markets expect? … That interest rates will stay higher and that inflation will also be higher,” Holzmann said to reporters in Vienna.
“What we do know is that the significant import duties spoken of could have detrimental ramifications for the world economy,” Finnish central bank chief Olli Rehn reportedly told the news agency as part of a media day in London. “A new trade war is the last thing we need amid today’s geopolitical rivalries – especially among allies.”
EU Policymakers skeptical of markets amid new tariffs
The returning president of the United States, Donald Trump, has made specific commitments in his opening remit about trade barriers. These include a “10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, intending to reduce the U.S. trade deficit,” Reuters reports.
Several of the President-elect’s legal and financial staff, including Robert Lighthizer, are set to table these tariffs. It was reported that Lighthizer would spearhead a trade tariff that the Republican party hopes will stimulate the economy. Still, some skeptics are wary that irregular policymaking could harm the struggling economy.
Politico covered the potential new tariffs, and a source close to the Trump administration said that justification would be made for the new tariffs. The source gave a different rate on all other international imports, they said to Politico, “Trump’s proposals, which aim to promote domestic manufacturing and lessen reliance on foreign countries, include a “universal” tariff of up to 20 percent on all goods coming into the U.S. and at least a 60 percent tariff on all imports from China.”
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