Trump’s duties entered into force and the EU announced the new ones – this means

US The 25 % import duties for steel and aluminum came into force on Wednesday.

The European Union announced the newcomers, among other things, on boats, whiskeys and motorcycles imported from the United States.

In this updated story, we will explain the effects of the accelerating trade war.

How do the market react?

European Stock exchanges have risen on Wednesday. The Stoxx Europe 600, followed by European companies widely, had risen by about 1.3 percent after 3 pm. The DAX index on the Frankfurt Stock Exchange, on the other hand, was nearly 1.9 % and the CAC 40 percent of the Paris Stock Exchange is about 1.4 %.

The Helsinki Stock Exchange’s general index opened about 0.4 %, but by the afternoon, the stock exchange was practically at the closing course on Tuesday.

Wednesday morning futures also anticipate a mild upward date for the US stock market. The S&P 500 index futures were at 10:30 am about 0.3 % and the technology -focused NASDAQ is about 0.4 %. The S&P 500 is the world’s most watched stock index. It follows the 500 largest listed companies in the United States.

After 3 pm, the futures turned to a brisk rise as recent data reported the rise of US inflation, that is, consumer prices, in February.

The market has been enough in recent weeks of turmoil and nervousness of the US President Donald Trump as a result of economic policy.

What does the EU do?

European The Union said on Wednesday that it would take retaliation due to US steel and aluminum bulls.

In early April, the EU will restore the newcomers used during Trump’s first presidential term. The new ones are targeted at boats, whiskeys and motorcycles imported from the United States. According to the Commission, these retaliations are now being fully introduced for the first time.

In addition, the EU will begin to prepare for more retaliation on imports of approximately EUR 18 billion from the United States. The new EU measures would be on steel and aluminum products and agricultural products, for example, and would come into force in mid-April.

How do duties affect the European and Finnish economy?

Customs The worst impact on the economy comes from a negative impact on the atmosphere of the international economy. That’s what Evlin’s main strategist says Valtteri Ahti.

Thus, it can be said that both US duties and EU counterparts are equally unfortunate to influence the Finnish and European economy. They are a poison to the economy atmosphere.

This was already seen by the president Donald Trump in the previous season. At that time, the US -China Customs War also affected the European economy, which was not one of the main parties in the customs interview itself.

The impact comes from the fact that the uncertainty created by customs causes companies to reduce and defer their investments and orders.

This is particularly evident in many Finnish companies, such as engineering workshops that make large investment goods such as pulp boilers. It is in their demand that the decline in investment stages strikes.

According to Ahti, the influence of customs duties in Finland may be bigger than many other countries.

“As an open, export -dependent small economy, Finland is particularly sensitive to the shocks of the global economy,” Ahti says.

As business strollers slow down and export does not pull, the speed of the economy will also slow down.

Right now, the influence of the Customs War is on a sensitive phase as the European economy has begun to recover, and the world industry has turned to rise after a long bad cycle.

Although Germany has agreed on a large resuscitation package, its effects on the European economy will not become more likely to seem more next year. The duties hit before that.

Do duties accelerate inflation and interest again?

European The newcomers set up themselves increase the price level in Europe in the same way as Trump’s duties do in the United States.

This is because, in general, importers of imported goods slide the customs costs they pay directly to consumers.

In Europe, this means that prices for US products are rising.

In general, prices rise means accelerating inflation. Can this lead to the European Central Bank to stop interest rates and even start to tighten its monetary policy?

Hardly. The situation is now different than normally as inflation accelerates. According to Ahti, the ECB does not respond to the price effects of customs duties because it interprets the duties as one -time price shows and does not help monetary policy.

According to him, a much greater risk is that duties coagulate so much economic growth in the economy that the ECB may have to lower their rates more than expected than expected.

“I believe the ECB will defend European economic growth,” Ahti says.

Slowing down economic growth also means slowing down inflation as demand for goods is reduced, he recalls. That is, the ECB would have a good basis for interest rates.

What happens in the customs war next?

Now The duties set are only the first wave of the Customs War. In the future, it may be much worse when the other wave of Customs War strikes in late spring.

This is what the Director of Trade Policy of the Confederation of Finnish Industries EK estimates Timo Mountain.

After the aluminum and steel clutches that came into force on Wednesday, there may be additional subsidies that the Trump administration is currently explored. Information about them is expected in April.

Trump has threatened to come with individual industries, such as the European automotive industry and the pharmaceutical and chemical industry. Sometimes he, for his part, has threatened that he has a 25 % duty for all EU imports.

Now the average EU customs level is 2 % and the US 3 %. However, there are big exceptions to different products, and Trump is happy to highlight in public.

For example, the EU has set a 10 % duty on cars, while the United States inherit only 2 % of them. In heavy vehicles, the opposite is true.

On the line In addition to the EU, there may also be individual countries for which Trump can place its own additional duties. If he wanted, he could, for example, slap the additional supplements to Denmark to put pressure on Greenland.

For such individual countries, the EU always responds to a common front, Vuori emphasizes.

When the list of the second round of Trump Customs War is revealed, the EU is likely to hit new new ones.

After that, according to Vuori, there are two opportunities.

“It is possible that the EU and the United States will sit at the negotiating table and fit things so that the customs cage will end. Or maybe the trade war continues and destroys both the European and US economy, ”Vuori predicts.

Trump Of course, even the steel and aluminum speakers already set already have negative effects in both Finland and Europe.

The effects can come through many bends. For example, companies using steel and aluminum can reduce their investments in new devices that can hit Finnish companies.

On the other hand, Outokumpu and SSAB, who take some Finnish companies to the United States, have even said they benefit from the customs of the United States. This is because they also have their own production in the United States.

What is the EU’s counter -attack?

Me: N The newcomers set on Wednesday, on the other hand, have been designed so that they do not fish in the EU’s own ankle.

This means that there are no products critical of European industry and economy, but rather less necessary consumer products like Bourbon whiskey, Harley Davidson’s motorcycles and Levi jeans.

These EU newcomers will take effect in early April. The EU has estimated their value of EUR 26 billion, the same as the EU aluminum and steel export to the United States.

The list of newcomers is the same as the EU had produced in a counter-impact on the steel and aluminum back of Trump in the previous season. However, it was not implemented at the time because the president Joe Biden frozen the duties set by Trump.

In addition to the old list, the EU will start preparing for more retaliations on imports of about EUR 18 billion from the United States.

These counterparts could target, among other things, steel and aluminum products and agricultural products, and would come later in the spring.

In all Customs are such a complicated litter that it can be difficult to predict all consequences.

At its worst, the high duties set by the United States can even lead to Asian companies to start exporting cheap steel to Europe.

This was the case in Trump’s first season. It made the EU countries to do protective measures against Asian steel imports until next year.