News Insight
''Trade war with United States most likely''
The American presidential elections are approaching. In November, it will become clear who will be the new president of the United States. Rabobank emphasizes in a recent report the Dutch dependence on the United States, and the consequences if Donald Trump becomes president. Rabobank outlines a number of scenarios. ''A trade war is most likely the scenario''.
A trade war between the United States and Europe could arise from Trump's plans to improve the trade balance for the United States and bring industry back within its own borders, writes Rabobank. He aims to achieve this by imposing trade tariffs on goods from China, but also from Europe.
Rabobank calls a trade war the most likely of the scenarios outlined in the publication. If Trump follows through with his plans, Europe will most likely respond by doing the same: higher import tariffs on American products, leading to a trade war. Our exports will be affected because we will become more expensive for Americans. At the same time, it will become more expensive for us to import American products.
Rabobank examined the vulnerability of the Netherlands in terms of imports from the US. Vulnerable products include Phenol (input for disinfectant and aspirin, among others), as well as Borate (e.g. raw material for fertilizers, but also for parts of wind turbines). The US also supplies important raw materials for medicines. Agricultural goods were excluded from the study and will be discussed later, but Rabobank does indicate that soybeans and almonds are vulnerable.
In 2022, 8.5% of all Dutch goods went to the United States. Germany ranks first with 17.5%. The United Kingdom, Belgium, and Luxembourg are also important trading partners. In 2022, 10.6% of what we use in the Netherlands came from the United States. Most of the goods come from Germany (13.9%) and China, Taiwan, and Mongolia (together 11.3%), according to Rabobank.
If trading with America becomes more expensive, companies will logically look for cheaper suppliers. If these products are available elsewhere, there is a good chance that the supplier is a non-ally, writes Rabobank. On the other hand, a product could be replaced by a substitute available within European borders. It is difficult for Rabobank to estimate which products this applies to. But as known, this is often very difficult for metals and minerals.
To ensure that the Netherlands is less affected by a potential trade war, Europe could, for example, apply very selective import tariffs. But whether Europe will push back enough in that case is the question.
Alex Jurvillier
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