Economy Which European countries would suffer most from Trump's tariffs?

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Donald Trump has announced that he intended to impose tariffs of 10% or 20% on all imports to the US.

I have asked ChatGPT to compute a ranking of of European countries by the highest proportion of their GDP tied to exports to the United States.
  1. Ireland: 22.86% of GDP
  2. Hungary: 12.21% of GDP
  3. Belgium: 7.92% of GDP
  4. Austria: 6.05% of GDP
  5. Netherlands: 5.50% of GDP
  6. Czech Republic: 5.10% of GDP
  7. Italy: 4.00% of GDP
  8. Finland: 3.86% of GDP
  9. Germany: 3.83% of GDP
  10. Spain: 2.37% of GDP
  11. Denmark: 2.34% of GDP
  12. France: 1.88% of GDP
  13. Sweden: 1.74% of GDP
Ireland would clearly be the most affected — despite the fact that it is one of the closest allies of the United States.

In second place comes Hungary, whose president, Victor Orban, is probably the EU leaders that respects and supports Trump the most. Funny way to thank your supporters, but that's to be expected from Trump.

Outside Europe, Israel has one of the highest proportion of GDP tied to exports to the US (about 20% of its GDP). Ironically that's another close US ally.

Ireland and Israel are both much more dependent on exports to the US than Canada (10% of GDP) or Mexico (13%), and vastly more so than Japan (3.5%) or China (2.8%).
 
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The percentage of GDP linked to export to the US is probably much too high for Belgium, notably because a lot of goods from outside Belgium transit through the port of Antwerp, which is one of the biggest in Europe. ChatGPT agrees with me when I pointed this out.
  1. Port of Antwerp's Role: As you rightly pointed out, Antwerp is one of the largest ports in Europe. It handles a significant volume of goods that are not necessarily produced in Belgium but are transshipped through the country.
  2. Re-exports: The export figures likely include re-exports, which are goods that enter Belgium and are then exported to the US without significant transformation. These goods would be counted in Belgium's export statistics even though they didn't originate in Belgium.
  3. Multinational Companies: Belgium hosts many multinational companies, particularly in sectors like pharmaceuticals. The exports from these companies are counted as Belgian exports, even if the parent company is not Belgian.
  4. Value Added: The GDP contribution is typically calculated based on the value of exports, not necessarily the value added within Belgium. This can inflate the apparent contribution to GDP.
  5. Statistical Methods: The way trade statistics are collected and reported can sometimes lead to overestimation of a country's actual economic activity related to exports.
Given these factors, you're correct to be skeptical about interpreting this percentage as representing purely Belgian-originated goods. The 7.92% figure likely includes:
  1. Goods produced in Belgium by Belgian and foreign companies
  2. Goods transshipped through Belgian ports (especially Antwerp)
  3. Re-exports of goods that entered Belgium from other countries
 
Trump's plans for the implementation of punitive tariffs are not the result of an eccentric president's temper, as much of media would like us to believe. They are owed to the changing global position of the American industry. Eminent US economist Jeffrey Sachs once remarked that liberalism and empire always went hand in hand. He was specifically referring to the British Empire in its heyday but that insight is just as valid in respect to the US. The free market was greatly celebrated in the US as long as US corporations dominated the world market. As soon as they began to face competitive disadvantages due to the rise of a serious adversary like China, their reaction was to resort to good ol' protectionism. There is no such thing as free markets. The policy initially confined to China is now about to be expanded to the EU.

I don't know how reliable your ChatGPT compilation of data is (my stance on these algorithmic toys is well-known) but I think the best example illustrating US-EU trade relations remains Germany. Just last year, Germany achieved a trade surplus of 63,5 billion Euro just with its US exports. That's one third of their entire trade surplus. Imports from the US amounted to 94,4 billion Euro, exports to 157,9 billion. If you're looking for an explanation for why Germany behaves like such a loyal vassal to the US, even keeping silent about the destruction of Nord Stream 2, this is one part it.

The Institue for German Economy (Institut für Deutsche Wirtschaft) based in Köln (Cologne) paints a gloomy picture for Germany's heavily export-oriented economy from 2025 to 2028, should Trump really go ahead with his tariff policy, which seems very likely. After a gasp of relief that Biden's Inflaction Reduction Act didn't lead to a major exodus of German industry to the US, it is now predicted that Germany may lose up to 180 billion Euro in respect to its US trade in the aforementioned period. As a response, the EU announced its intent to implement counter tariffs. According to the Institute for Germany Economy, this could cost the US up to 874 billion dollars but the US economy is far more capable of adapting and recovering.

Personally I think this is a big chance for Europe to return to the pursuit of its own interests which includes the rejection of its US vassalage. But the EU itself is paralyzed by diverging and conflicting national interests among its member states. For more than two decades, Germany has been using the EU to consolidate its hegemony instead of strengthening its partnership with France for the sake of European independence and sovereignty. The result of this short-shighted and arrogant policy is great estrangement between these two states and great economic uncertainty. Europe is in great danger to fall behind the US and China, also after shooting itself in the leg by cutting itself off from cheap Russian energy. In the meantime, an anti-German block emerged within the EU, composed of Poland, the Baltic states and Scandinavia. They are the only ones that benefited from this collapse of German-Russian economic relations while not gaining anything other than schadenfreude. The same countries are also the most fanatical US-NATO vassals which is not a coincidence.

We're about to witness a reassessment of transatlantic relations and the reasons for this are not ideology or Trump's personality. Both economic players are forced to react to changing economic circumstances and this means the sacrifice of certain aspects of friendly relations. It's capitalism 101.
 
I double checked and the annual value of Germany's exports to the U.S. is approximately €160-165 billion. Germany’s estimated GDP for 2024 is around $4.59 trillion USD in nominal terms. The export value of $180.1 billion USD from Germany to the U.S. thus represents approximately 3.9% of Germany’s total GDP. There may be slight variations from year to year, but the US market is really not that important for Germany.

In contrast, the total export value to European countries is projected around €640 billion in 2024. Given Germany’s 2024 GDP of about €4.25 trillion, this trade volume represents roughly 15% of its GDP.

Germany's total exports of goods and services worldwide contribute approximately 47.14% to its GDP.

Looking at it from another angle, imports to the US only represent 11% of the US GDP, while US exports make up 15% of the country's GDP.

Exports have to be further broken down between goods and services. Trump's tariffs would only apply to physical goods like electronics, cars, and machinery, as they physically enter the country and pass through customs, and not intangible services like online subscriptions, digital services, or consulting from abroad. The reverse is also true, so if other countries were to impose tariffs on US imports in retaliation companies such as Google, Netflix or Meta would not be affected.

German car makers shouldn't worry either as most of them already have manufacturing plants in the United States, primarily to better serve the North American market and to avoid import tariffs. For example:
  • BMW: BMW's largest production facility worldwide is located in Spartanburg, South Carolina. This plant produces BMW’s X-series SUVs (such as the X3, X4, X5, X6, and X7) for both the U.S. market and export to other countries.
  • Mercedes-Benz: Mercedes-Benz has a plant in Tuscaloosa, Alabama, where it produces SUVs (like the GLE and GLS) and some sedan models (such as the C-Class in past years, though production has shifted back to Germany). The Tuscaloosa plant has been in operation since the 1990s.
  • Volkswagen: Volkswagen operates a plant in Chattanooga, Tennessee, where it produces models tailored to the U.S. market, including the Atlas SUV and the Passat (until recently). This facility is also set to produce more electric vehicles (EVs) as VW ramps up its EV offerings in the U.S.
Things would be different for Porsche though as it exports directly its cars from Germany to the US. But people who buy Porsche are probably not going to worry about a 10% increase in prices.

Other German companies that would be affected by Trump's tariffs, even though they may have some manufacturing facilities in the US, include Siemens, Bosch, ThyssenKrupp, Bayer and Adidas.
 
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Since services would not be affected by import tariffs it is worth checking what percentage of exports are services as opposed to physical goods in each country. Here is what I found.
  • Italy 17% of exports are services
  • Belgium 20%
  • Canada 21%
  • Switzerland 24%
  • Germany 24%
  • Netherlands 32%
  • United States 34%
  • France 37%
  • Spain 42%
  • United Kingdom 55%
So if the US imposed 10% tariffs on all imports and other countries retaliated in kind with the same 10% tariff on US goods, countries like France, Spain and the UK would be much less affected as a good part of their imports are services.

The US is likely to suffer most from such a measure if all countries in the world imposed a 10% tariff on US imports. Exports represent 11.6% of the US GDP and all of it would be affected except for services (34% of the total), so the equivalent nearly 8% of the US GDP in exports would suffer from tariffs.

Other countries would only have such tariff on their exports to the US. For a country like France that only represents 1.8% of all their exports and if you only count physical goods that's about 1.2% of all their exports. So France would be 5 times less affected than the US by such a measure.

Even Germany would be much less affected than the US itself. German exports to the US represents 3.8% of German GDP but once we subtract 1/4 of them for services that's about 3% of GDP, as opposed to 8% for the United States.

So unless I'm missing something Trump's tariff don't make any sense for the US.
 
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