Europe Could Suffer Collateral Damage in US-China Trade War

As the China-U.S trade collides, the European businesses appear directionless. The nascent global trade war might affect the economic growth, which helped the region during the financial crisis. People believe that if the Chinese companies are kept away from the US trade then the European stocks can be improved.

Import taxes provoke fear when the entire country’s economy depends only on international trade. In Germany, the annual economic output has gone down by almost half because of fallen business confidence.

The German Chancellor Angela Merkel said, “It’s worth all our efforts to defuse this conflict, so it doesn’t become a war.” The US has to apply excise worth $34 billion on Chinese goods and China has to give excise of equivalent value in the form of seafood, oil, and soybeans.   

The US has put an excise on steel and aluminum from many allies, which has resulted in a dispute between the US and Europe. Now Europe has put an excise on US goods worth $3.25 billion. The Trump government is planning to impose taxes on cars, which would just add to the issue.

Jean-Claude Juncker, the head executive of the European Union has told that he will be visiting Washington soon to personally talk to Trump to not target Europe in further taxations. These disputes might spoil the European economy, which was the strongest last year before the global financial crisis.

Even after all these issues, the economy is still strong enough to create jobs for the citizens. The number of unemployed has reduced to 8.4 percent, which is the lowest since 2008. Most of the European companies will be affected by the disputes between the US and China, the biggest economies.

The tax that China is going to impose on the US will land the automobile industry settled in the US in trouble as the German carmakers Daimler and BMW make cars in the US and export it to China.

Daimler has stopped thinking about profits because of the higher-than-expected cost of taxes. BMW has already contacted the Commerce Secretary Wilbur Ross regarding the issues caused by an increase in taxes as more than half of its total production is exported to China.   

Post Author: Shyam

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