Boost China -EU trade to cancel American prices – Opinion

Published in 1776, Adam Smith “S Works, The Wealth of Nations, laid the foundations for modern economic theory, pleading for the division of labor and free trade. Smith argued that specialization increases productivity and efficiency, leading to greater wealth for all. Free trade between countries follows lower consumers with lower prizes and prizes The barrel of the decline.

Despite these respected ideas, US President Donald Trump says prices “will make America again large”. He again pursues a policy of “reciprocal tariff”, imposing imports to imports from countries that have prices on American goods, affirming that this will protect American industries and jobs while generating income.

However, economic realities contradict this point of view. Prices work as a tax on consumers and businesses, leading to higher prices and inflation. As import costs increase, manufacturers based on foreign raw materials are faced with an increase in production costs, which has often adopted these costs to consumers. In addition, reprisal prices by other countries harm American exporters, reducing market access and causing job losses in affected industries. The economic disturbances triggered by the prices prevail by far on the short -term income gains.

The reports indicate that American reciprocal pricing policy has an impact in a disproportionately disproportionate manner such as the European Union, Brazil and India. Among them, the EU can emerge as the “greatest loser” because the American prices target crucial sectors such as cars, where the EU has a competitive advantage. The EU automotive industry, already faced with challenges in electrification and regulatory pressures, could face more problems if its access to the US market is reduced.

However, the impact extends beyond cars. The machinery, pharmaceutical and aerospace products are also vulnerable to commercial barriers. Given that these sectors significantly contribute to GDP and the use of the EU, prolonged tariff conflicts could cause economic slowdown, job losses and investment reduction.

At the same time, Chinese manufacturers have made significant progress in the production and innovation of electric vehicles, a challenge to EU automakers has trouble approaching.

Adding to pressure, Trump also pushes large EU companies to move production in the United States, arguing that it would create jobs and strengthen the American economy. Trump says the EU operates the United States on the economic level, but the fact is: although the United States has a trade deficit with the EU in goods, the EU has a trade deficit with the United States in services.

The United States also benefits from high immigration, including European professionals and elsewhere in the world who contribute to American innovation and industry. Many of the most revolutionary companies in Silicon Valley have been founded or led by immigrants, and many Nobel Prize winners in science and economics came from abroad. For example, Elon Musk, founder of Tesla and SpaceX, grew up in South Africa, obtained his university studies in Canada and then built his commercial empire in the United States.

A critical factor to consider is that the American threat of imposing prices can be part of a strategic game to force the EU to make concessions, to buy more American products or to increase imports of American oil and gas. The EU has several potential responses to trade pressures in the United States. He could use counter-level measures, which makes American property dear to the EU markets.

But such measures may climb the trade conflict, ultimately harming the two economies. A more strategic response would be to diversify trade relations far from the United States. The EU has already continued trade agreements with Latin America, Canada and India, aimed at extending market access and reducing dependence on any trading partner.

The EU and the four Mercosur countries (Southern Common Market) – Argentina, Brazil, Paraguay and Uruguay – recently concluded a political agreement to develop a deep partnership. The EU is already the largest trading partner and the most important investment in Mercosur. By deepening trade relations with China, the EU could access a vast market for its exports, especially in high -value industries such as automotive, luxury products and pharmaceutical products. China, faced with its own business challenges with the United States, is likely to host closer economic cooperation with the EU, potentially offering investment opportunities and a reduction in trade barriers.

In addition, the president of the European Commission Ursula von der Leyen, during her recent visit to India with a high-level delegation, held detailed discussions on a free trade agreement with the country. The EU and India aim to sign the agreement by the end of the year, which makes it the biggest trade agreement of the genre all over the world. The EU hopes to have better access to the Indian market for its cars and minds, despite the traditionally high prices of India on these goods, and put pressure for a wider investment agreement.

However, negotiations on agriculture remain difficult, the two parties having trouble finding common ground.

Although the United States seeks to exert economic pressure through prices, it is unlikely that the EU is the greatest victim of these policies. The EU remains an economic power with a large internal market and a strong and diverse export orientation. Unlike small savings that have trouble absorbing commercial shocks, the EU is resilient enough to adjust its commercial strategy and mitigate the effects of American tariffs, while its commitment to multilateral trade agreements reinforces its ability to navigate economic challenges. Given these forces, the United States will find it difficult to perform its pricing policy effectively without facing an important inner backlash.

Following these developments, the EU is likely to pursue greater strategic independence in issues of economic policy and others, including military issues. The discrepancy of his dependence on American trade could extend to cooperation in defense and diplomatic alignment. The strengthening of China’s links can again emerge as a strategic priority, the economic collaboration forming the basis of a broader geopolitical commitment.

While recent discussions have focused on reducing dependence on China in key supply chains, the practical need for stable trade relations can prevail over decoupling efforts. While the EU seeks to cover long -term risks, China will have the opportunity to improve its position and influence in the region. In addition, the EU can develop a long-term strategy to attract and retain highly qualified migrants, ensuring that its own innovation ecosystem remains competitive compared to that of the United States.

In the end, the reciprocal tariff policy of the United States can turn against him, not only weaken his own economy, but also accelerate the change from the EU to a more diverse and independent global strategy. The EU’s response will shape the future of international trade, stressing the importance of strategic partnerships and economic resilience in an increasingly uncertain global landscape.

The author is a professor at the free university of Berlin and president of the World Labor Organization, a global network of researchers based in Germany investigating globalization. Opinions do not necessarily reflect those of China daily.

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