
This article was last updated on October 25, 2024
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US elections fuel economists’ concerns about protectionism
If the United States protects its economy with higher import tariffs, this will be at the expense of the growth of the Dutch economy. Rabobank warns about this in a report on the upcoming presidential elections. Earlier this week, the International Monetary Fund (IMF) warned of lower growth in the global economy due to protectionist measures.
Republican presidential candidate Trump wants to protect American companies by raising import tariffs. “We protect our businesses with tariffs,” Trump said last week. “We get thousands of companies coming to our country. As far as I’m concerned, the most beautiful word in the dictionary is tariffs.”
Rabobank calculated what a universal rate of 10 percent – Trump’s proposal – means for the Dutch economy. It also looked at a scenario in which a 5 percent tariff is introduced and what happens if Trump’s Democratic opponent Harris becomes the new president.
Rabobank states that in the Trump scenario with 10 percent levies, the Dutch economy will be 10 billion euros smaller in the long term than in the Harris scenario. Inflation is also rising: according to calculations it is 0.9 percentage points higher.
Countermeasures
This is partly because products from the US are becoming more expensive. Manufacturers in America have to pay more for raw materials and parts they need for their products because of the tariffs. The bank also expects the EU to introduce countermeasures. These could be own levies, which would make products from the US more expensive anyway.
It is not the case that under Harris the US will not impose tariffs. Current President Biden has not reversed his predecessor Trump’s tariffs and the bank does not expect Harris to do so. According to Rabobank, the expected effects of its policy for the Netherlands are still small, because rates remain low.
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