An escalation of the trade war with the U.S. will likely lead to more bankruptcies

An escalation of the trade war with the United States of America could lead to an increase in the number of bankruptcies in the Netherlands. This prediction was made by credit insurer Atradius in a report that was published on Thursday. The number of bankruptcies is expected to decrease slightly if there are no consequences linked to the trade war.

The number of bankruptcies in the Netherlands rose by 29 percent on a yearly basis last year. Atradius said this is significantly high and came as a result of high costs, high interest rates, and the repayment of debts from the coronavirus pandemic.

However, due to the stabilization of inflation, the financial prospects are better for this year. That is why the credit insurer expects the number of bankruptcies to drop by two percent. An increase in bankruptcies of eight percent is predicted to come next year. This is mainly due to import tariffs, leading to a drop in the economic growth.

Atradius emphasized that there are still some insecurities regarding a trade war with the United States. The credit insurer has developed a scenario in which there is rising inflation as a result of higher import tariffs.

For the Netherlands, this would result in an increase of three percent in the number of bankruptcies. There would be a huge increase of 21 percent in companies being declared bankrupt in 2026 in this scenario.

“The uncertainty about American trade policies and the import tariffs bring considerable risks for the world economy,” said Atradius economist Theo Smid. “If this trade war escalates further, then especially the open economies, like the Netherlands, will suffer the consequences. This can lead to a global increase in bankruptcies and a delay in economic growth.”