Trump's import tariffs would be "laughable" if they weren't so serious: DNB President
Like many other economists, president Klaas Knot of De Nederlandsche Bank was surprised by the scale of American import duties Donald Trump announced on Wednesday. How the White House determined the percentages of the duties was particularly “appalling,” he told Nieuwsuur. “This has nothing to do with economic theory. If it weren’t so serious, I’d call it laughable.”
The American government estimated the total trade deficit with the United States per country, and imposed half of that as import duties. A trade surplus means that a country exports more to another country than it imports. So Trump wants the countries he is targeting to import as many goods from the U.S. as they export to the U.S.
“Trump’s philosophy is that any trade surplus is wrong, but there is no economist who thinks so,” Knot said. “Countries are at different stages of development, and some stages involve a trade surplus or a trade deficit. There is nothing wrong with that in itself.”
According to Knot, the American consumer will pay the bill for these tariffs. “During his first term, Trump also imposed import tariffs. In retrospect, it turned out that the American consumer paid almost 100 percent for this. Inflation in the U.S. is not yet under control. A new wave of inflation is coming on top of this.”
For the Netherlands, a lot depends on what goods will be exempted from the import tariffs. Based on initial calculations, the DNB thinks the Netherlands will lose a few fractions of a percentage point in economic growth this year. Next year, this could increase to a full percentage point. With expected economic growth of around 1.5 percent, that is a significant blow. Knot expects the food sector, the steel industry, and the chemical sector to be hit hardest.
