Leading economists are cautioning against a potential escalation in trade tensions following threats of tariffs imposed by the United States. Professor Jens Südekum of the Düsseldorf School of Economics, who also serves as an economic advisor to German Finance Minister Lars Klingbeil, warned that a trade war would significantly impact Germany, although the United States itself would likely experience even greater repercussions.
Südekum’s comments followed President Donald Trump’s recent announcements regarding potential tariffs on goods from the European Union. The EU’s decision to refrain from immediate retaliatory measures and instead await developments until August 1st has been deemed a prudent approach. However, Südekum emphasized the importance of the EU being prepared to respond swiftly and decisively should the situation escalate.
Despite the current tensions, the economist expressed optimism regarding the possibility of reaching a resolution before the August deadline. He noted a precedent of President Trump retracting previous strong pronouncements. Südekum stressed that the EU must remain vigilant to ensure any eventual agreement doesn’t result in a compromise that deteriorates the conditions for European businesses compared to the status quo prior to Trump’s presidency.