Gros on duties: “German proposal to accept 10% is good. Trump is the problem”

"The German proposal, supported by Italy and by Ursula von der Leyen herself , to accept a "dry" 10% of duties in order to get out of the impasse, seems reasonable to me. The problem is that one of the European interlocutors must be able to speak for ten minutes with Trump himself, perhaps one morning when he has woken up in a good mood, to sign the commitments together". According to Daniel Gros , the German economist who directs the Institute for European Policymaking at Bocconi after a long experience in Brussels think tanks, the unknowns never end, for duties as for any other problem involving the Washington administration.

Does supporting this solution amount to yet another proof of Europe's weakness?

"Partly, but I wouldn't put it that way. This whole colossal story of tariffs was invented from scratch by Trump, convinced that he could cash in a few more billions at the expense of China and Europe, which he calls a "parasite", and to start a process of reindustrialization in America, which is the most unlikely of objectives. The only result is chaos in the global economy. But we must pragmatically take note of reality, it is one of the things in life that happens and must be addressed by limiting the damage as much as possible. From this perspective, the diplomatic approach is the most sensible, as even Macron seems to be about to concede."

But wouldn't a more cohesive Europe have more negotiating power?

«Once again we must base ourselves on reality. And do it proactively: if this dispute with America is an opportunity to remove some of what are improperly called “ internal duties ”, that is, the barriers and regulatory constraints that hinder the common market, then a positive aspect can emerge in all this confusion».

What will the tariff costs be?

"Any calculation is premature while waiting for the negotiations to be concluded. It is difficult to predict the tariffs that will actually be collected, as well as to identify who will bear them: whether the American consumer or the exporting company in the case in which it absorbs part of the costs in order not to lose market share. The last official data refers to May, when the duties brought in 22 billion on 275 of imports to America, which means an effective duty, i.e. paid, of only 8%. And it should not be forgotten, speaking of bureaucratic obstacles, that the duties dossier includes twenty thousand items, and must be applied in over one hundred countries".

How does the pre-agreement with China fit into this context?

"In a favorable way for us Europeans because China is our main competitor on American soil and seeing it tied down to duties that are no longer as stellar as those Trump was talking about but still higher, leaves market space for European companies. Which, as the protests from the productive sectors that continue to rain down prove, already have their own problems with 10% duties. We need to see where the negotiations will lead, especially for highly sensitive sectors such as cars , resigning ourselves to steel and aluminum that are ultimately marginal. Let's remember: nothing is ever certain with Trump. All it takes is a little opposition, that he speaks with one of his most radical advisors or that a prime minister like Sanchez makes him nervous, for him to overturn the table, go back on his word, act in the opposite way. We have continuous proof of this, every day, every hour."