The consequences of the customs measures of the Trump government could benefit European products, according to an article published on Wednesday by the European Central Bank (ECB), the replacement of American products by other countries is important in all the scenarios of customs duties, staggered between 5% and 20%.
But “it is much higher in respondents who indicate a change in preference, instead of a price increase due to the customs law, as the main reason,” according to the authors of this blog note, based on a survey conducted in March by the ECB on the anticipations of consumers against the commercial war.
Towards a boycott of American brands?
This dynamic suggests that the reactions of European households “are not limited to a temporary response to an increase in customs tasks, but could indicate a lasting structural change in consumption preferences, to the detriment of US products and brands,” they underline the authors, whose comments do not officially involve the ECB.
In reverse of the behaviors observed in the United States, where consumers say they are ready to store products that probably become more expensive. Europeans seem to adopt a more radical posture: 44% of interviewed households plan to reduce their purchases of American products, more due to the assertive rejection of these brands than their price.
Another remarkable education: the propensity to keep US products increase with the level of income, which goes against traditional economic logic.
If, in theory, the elasticity of demand according to a price variation decreases with income, the survey shows that “people more win, more likely make a change,” specify the authors.
In other words, the richest households, although they are as much as possible to absorb price increases, are ready to deliberately choose other options.
Source: BFM TV
