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Replies

Sander Tordoir @sandertordoir.bsky.social · 01/04/2025

First, the EU simply cannot retaliate against the US dollar-for-dollar. That'd require setting even higher tariff rates than the US - and escalate further – because the tariffable base of imports is smaller. The EU imports less than the US than vice-versa (hence the trade imbalance). 2/4

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Sander Tordoir @sandertordoir.bsky.social · 01/04/2025

Second, surgical strikes would lead to fewer price hikes on imports than in the US - lowering chances of stagflation scenarios that may bind, say, the ECB. The EU can then let powerful macro-economic policy levers - ECB rate cuts and Germany's fiscal largesse - mop up the damage to growth. 3/4

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Sander Tordoir @sandertordoir.bsky.social · 01/04/2025

Third, the EU should hit sectors sectors where there are substitutes domestically and from other trade partners. That, too, is a bit like Brexit - the EU have alternatives. The US doesn't because they are hitting (almost) everyone with tariffs. 4/4

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