Trump's import tariffs will slow Dutch economic growth: CPB and DNB

The import duties announced by United States President Donald Trump on April 2 are expected to slow down economic growth in the Netherlands, the Netherlands Bureau for Economic Policy Analysis (CPB) reported based on a study into the effects of the trade tariffs. De Nederlandsche Bank (DNB) simultaneously published its own study with more or less the same conclusions.

According to the CPB, the tariffs will lead to higher costs and a lot of uncertainty for companies. As a result, investments and exports will fall, which will lead to lower growth. According to the CPB, the gross domestic product (GDP), the benchmark for economic growth, will be 1 percentage point lower by the end of 2026 due to the levies.

However, due to the falling exchange rate of the U.S. dollar, the consequences of the levies for inflation in the Netherlands are limited. If the European Union retaliates with import duties on American goods, this will lead to higher import prices for the Netherlands, but the effect of this on inflation is also unlikely to be very great. In addition, the CPB did not take into account further increasing uncertainty among companies and investors. Retaliating in that case could have even greater consequences.

According to the CPB, the consequences for the Dutch economy are smaller in the long term than in the short term. This is because companies have more time to adapt and find alternative sales markets. The ultimate consequences for sectors are different. In the longer term, industry will continue to suffer from the deteriorated competitive position compared to the U.S., but service sectors can actually benefit.

DNB also looked at the effects of the import duties on the Dutch economy. The conclusions were almost the same as those of the CPB. DNB also expects that the import duties will lead to a decrease in economic growth of approximately 1 percent next year. The central bank also predicts that the impact on inflation will be limited “to a few tenths of a percentage point.”

In light of the trade war, DNB emphasizes that it is crucial for the Dutch economy that the European internal market is strengthened. This can be done by minimizing trade barriers within the European Union. This will create an internal market with sufficient scale and sales opportunities “from which companies, consumers, and economic growth can benefit,” according to DNB.