On July 9, the 90-day delay announced by US President Donald Trump on raising tariffs on imports from many countries, including European Union countries, was supposed to expire. However, the American leader postponed the increase in trade tariffs on imports from the European Union and some other countries until August 1. In a comment to UNN, Igor Garbaruk, a member of the "Economic Discussion Club," and economist Oleksandr Okhrimenko discussed whether Trump would dare to impose tariffs on the EU, who would benefit from it, and what awaits Ukraine.
Reasons for the US-EU customs war and the postponement of new tariffs until July 9
In April, US President Donald Trump announced the introduction of new tariffs for certain countries, including China - 34%, the EU - 20%, and Great Britain - 20%.
Later, Trump announced a postponement of the introduction of tariffs against the EU until July 9, but yesterday, July 8, it became known that Trump would sign a decree to postpone the introduction of tariffs against other countries from July 9 to August 1, which should give more time to conclude trade agreements.
Igor Garbaruk, in a comment to UNN, noted that Trump's idea of introducing tariffs, particularly against the EU, was "sacred" - it was about supporting American manufacturers, supporting their own market at the expense of other countries.
Trump hammered home the idea that the American economy has a huge trade deficit, a negative trade balance, and accordingly, to "protect" its own producers, this tariff war, a customs war of all against all, was launched. The US against everyone. In reality, the world does not live by such laws
He emphasized that today, if production is established in China, Canada, or Mexico, it is impossible to simply move it to the United States in a short period.
"Therefore, in fact, this was such a statement by Trump regarding tariffs in his style, 'I am the best, I am the smartest, I can break everyone over my knee,' but he is not succeeding and has not succeeded. Therefore, these postponements are constantly happening. There is one date, then another, then a third. In fact, the situation is that the statement was made as loudly as possible. All stock markets were shaken to the core, but at the same time, we perfectly understand that statements can be different; we need to look at real actions. What will this lead to? I am surprised that such things could happen at the level of the US president, a country that forms a quarter of the entire world's GDP," Garbaruk adds.
Oleksandr Okhrimenko emphasized that the reasons for the US-EU customs war are very deep.
"Yes, once the US was indeed a global exporter, but that was a very long time ago, in the 50s and 60s. Somewhere starting from the 60s, the trend began to change, it accelerated in the 70s, and indeed, at the moment, the European community exports more to the US than the US buys. But this is due to the fact that this is the economic model. And the fact that Trump is trying to break it is just complete nonsense. Why was it postponed? Well, most likely, no one will implement anything at all. It's just that at the moment, everyone has already realized that Trump is just a 'blabbermouth' who doesn't understand anything about economics or anything else, and loves to 'blab'. As a result, various events occur. And he is already trying to do something by intimidation. Although I emphasize once again, without exports from the EU, the US cannot exist. Therefore, if tariffs are imposed, it will primarily be a blow to the US economy," says Okhrimenko.
At the same time, he emphasizes that it cannot be said with 100% certainty that Trump will still introduce additional tariffs on the EU, but, according to the expert, he may introduce tariffs on secondary goods from the EU that have no significance for foreign trade, as was the case with Canada and Mexico, when the US president introduced tariffs against these countries and then made a lot of exceptions.
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Possible US decisions after the postponement period ends
As Garbaruk explained, the EU pays an additional 10% duty when exporting goods to the US, but, according to him, after the introduction of additional 50% duties on the EU, the European Union will respond in kind.
There will be absolutely mirror situations, both from the European countries, and from China and all other countries to which these sanctions will be introduced. Because no one will allow themselves to just bow their heads and that's it. As far as I understand, Trump hoped that he would impose maximum sanctions on everyone, and the leaders of the countries would bow their heads and say: "Yes, we agree." The US market is the largest market in the world. It is a quarter of the world's GDP. But at the same time, I don't think any country will contradict its own interests.
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According to him, if tariffs are still introduced on EU countries, there will be no winners.
"The global trading system will be unbalanced. Overall, it will be unbalanced. Trade wars will not lead to anything good. In fact, they will lead to the fact that those huge container ships from China and India will arrive half-empty or completely empty, and accordingly, all this will only lead to the fact that the goal of supporting American manufacturers will turn into the fact that the products of American manufacturers themselves will become very expensive, because the raw materials they bought, for example, other components, in the same China or India, or in other countries, are subject to duties, and accordingly, they will be more expensive. I believe that no one will win from this. The only one who can win in this 'war' is the one who will engage in smuggling. That is, the black market will win," Garbaruk noted.
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Potential impact of trade conflict on Ukraine's economy
Garbaruk emphasizes that Ukraine's economy is not sufficiently connected to the US economy, but Trump's tariffs will affect metal producers: steel, aluminum, etc.
This will have some impact, but to say that it will catastrophically affect us, Ukraine, I do not believe that it will have any significant impact. Of course, we expected a different reaction, that for Ukraine, given that it is in a state of war with the aggressor, we would expect the US to include Ukrainian companies in duty-free trade. To involve them, on the contrary, so that they develop. But for the current White House administration, their own economic interests are more important than political ones and upholding those democratic principles that we have always heard from almost all administrations in the White House.
Okhrimenko also believes that although Ukraine does export a lot to the EU, Trump's tariffs against the EU will not significantly affect Ukraine.
"Why? What do we export to the European community? As a rule, raw materials, agricultural products, we export ore, partially metal. We are more affected by these bans related to the export of food products to the European community, because what we export is consumed by the EU, not the US. And for us, these quotas, restrictions, they really hinder us. It's just that at the moment, what we export to the European community is mostly consumed by the European community itself," Okhrimenko noted.
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Consequences for Ukrainian exports and trade relations with the EU
Okhrimenko reminds that the EU canceled the visa-free trade for Ukraine, which is bad for Ukraine itself. "For us, the most important export to the EU is food products. Not ore, not metal, all this is auxiliary. We even export furniture, there is such a thing. We also export machine-building products. And for us, it is really more important to expand quotas, remove restrictions, expand the possibility for exporting a larger range of food products. This is really very important. But this depends more on the European community than on their relations with the US. This is a little different," the expert explains.
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He emphasizes that due to the termination of visa-free trade, trade with the EU from Ukraine will decrease, but this does not mean that it will not exist at all.
Previously, we could sell corn to the EU completely duty-free. Now, only within the limit. I wouldn't say it's very large, but it's not small either. And indeed, this will have an impact. Ukraine exports quite a lot of honey to the EU. And it is very important for us that there is no duty there. With duty, it turns out to be quite expensive, and for our beekeepers, it is really not very profitable.