The entry into force, Thursday, August 7, of the new customs rights imposed by Washington in dozens of countries will have economic consequences, but which one will pay the price?
Increased prices for consumers, reduced margins for companies, loss of competitiveness: the point in the main interested in these new taxes.
More expensive products on the shelves
With 15% of customs tasks in Japanese cars, 20% in shirts made in Vietnam or 100% announced Wednesday in semiconductors, US buyers may have to pay for their most expensive products, unless they can postpone their purchases in local equivalents.
The president of the American Central Bank (FED) Jerome Powell estimated that the impact of customs surcharges began to materialize in “certain categories of goods.” For example, the American Hasbro toys (Monopoly, Furby …), half of which comes from China, saw that their sales prices began to rise in May and June, the group said.
These taxes are even more problematic in the sectors for which the United States has no local production, underlines Philippe Chalmin, Professor Emeritus at the University of Paris-Dauphine. Copper, largely imported from Chile, its first producer in the world, was initially affected by US customs tariffs in 50%.
“Half of the United States needs to be imported from Chile, the price of copper in the US market had increased by 25% compared to the world reference after the announcement,” says Philippe Chalmin. Finally, the Trump administration decided to reverse and tax only semi-terminated copper products.
Important losses for exporting companies
The invoice could also weigh on exporting companies, the increase in the price of their products, resulting in the loss of competitiveness in the United States. This is particularly the concern of the European wines and spirits sector. At this stage, the EU has not obtained an exception for wines and spirits, a particularly sensitive sector for countries such as France and Italy.
Will Chianti or Champagne be replaced by Californian wine? The “will be even more brutal” impact since taxes go hand in hand with the decline of the US dollar, which further adds the price of bottles, alerted the president of the French wines and spirits Gabriel Picard. The latter even estimated in a press release that this combined effect could lead to “a loss of one billion euros” for French producers.
“There will be sectoral differences and even within the same sector, it will depend on the negotiating power of each one”, between the producer, the wholesaler and the retailer, analyzes Bruno de Moura Fernandes, responsible for the macroeconomic research in Coface. However, the economist believes that the effect will be marked mainly for industries that already have difficulties in being competitive compared to their US competitors, especially in chemistry and steel in Europe.
A possible fall in global demand
Companies have already announced that they would fulfill their margins to compensate for the effects of the commercial war. Automobile manufacturers are particularly concerned. By 2025, the German Mercedes provides significantly lower sales than last year, as well as an elevated operational margin of what was expected. For its part, Porsche only expects a margin between 5 and 7%, compared to 10 and 12% at the beginning of the year.
But, above all, “there will probably be a waiting period to see what will happen, how competitors will behave and will know if the company manages to pass price increases,” says Bruno de Moura Fernandes. It is likely that customs tasks have broader consequences in the world economy with a possible drop in demand.
Petroleum groups have already warned about a decrease in their gains, such as British capacity. The latter published in the first half of a net gain in decline, due to the lowest margins and prices, the increase in customs tariffs that reduce the demand for global energy.
Source: BFM TV
