European markets breathed a sigh of relief on Thursday following the news that the EU and the US had reached a deal to calm trade war fears, but experts are warning that the ceasefire may only be temporary and that the conflict is not over.
“I believe there is around a 50 per cent chance the existing tariffs will be lifted,” says Andreas Hatzigeorgiou, chief economist at the Stockholm Chamber of Commerce, while Handelsbanken strategist Lars Henriksson suggests many obstacles lie ahead.
“Trump’s strategy is similar to one that is used on second-hand auction sites. If you say a bicycle is not worth a single penny, you can bring the price down. It should be remembered that he is a businessman at heart,” he says.
US and Asian markets nosedived on Tuesday following US President Donald Trump’s threat to place tariffs on another USD 200 billion of Chinese goods. With the EU planning to impose tariffs on US goods in the coming days, EU Trade Commissioner Cecilia Malmström has told the TT news agency that “a trade war is approaching”.
Finance Minister Magdalena Andersson has warned that an escalation of the trade dispute will hurt the Swedish economy. Although the introduction of tariffs on aluminium and steel have had a limited impact on Swedish exports to the US so far, the minister is concerned over Mr Trump’s threat to raise tariffs on motor vehicles; Swedish exports of vehicles to the US amount to some SEK 20 billion annually and make up 23 per cent of the country’s total exports to the US.
EU Affairs and Trade Minister Ann Linde has said that the EU’s response to US tariffs, in the form of countermeasures, is proportionate and it is important that the EU does not contribute to an escalation of the conflict. “What is positive in this process is that the EU is sticking together and showing a united front”.
Ms Andersson then pointed out that 71 per cent of Sweden’s total exports go the EU’s internal market, saying: “This means that our EU membership is central in this situation and it is remarkable that there are several parties which believe we should leave the EU”.
Sweden’s Trade Minister Ann Linde (S) considers there to be serious risks for Swedish companies if there is a trade war between the United States and China.
President Trump recently introduce duties on solar cells and washing machines, a measure aimed mainly at China. China responded by appointing an inquiry into price dumping of sorghum, an important export product from the US to China.
“We are worried about this… A protectionist action is often met by another, which also hits Swedish products,” says Ann Linde, and says that her staff have been in touch with the US to point out that Swedish companies employ Americans in all US states.
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