Johan Van Overtveldt on the trade dispute with the US: “Put the deal on ice for now”

US President Donald Trump’s recent decision to raise tariffs worldwide to 15% is fuelling significant economic uncertainty. According to MEP Johan Van Overtveldt, it would be wise to postpone the vote on the trade agreement between the European Union and the United States. He made the remarks on the radio programme De Ochtend.

Hold off on voting on the trade agreement

After the US Supreme Court struck down earlier tariffs, President Donald Trump responded by introducing temporary 10% duties, which he soon increased to 15%. While that rate matches exactly what was agreed in the yet-to-be-approved EU-US trade deal, the situation remains highly unpredictable for businesses.

“More than the tariffs themselves, it’s the uncertainty that is now starting to weigh heavily on economic activity,” Johan Van Overtveldt said. At this point, he argues, no one really knows where things are headed in Washington. He therefore calls for the vote in the European Parliament to be postponed. “I’m not saying put it in the deep freeze, but at least in the fridge, until we see how the game plays out in Washington.”

Growing domestic pressure in the United States

According to MEP Johan Van Overtveldt, resistance to what he describes as the president’s destructive trade policy is mounting across the United States on several fronts.

First, American households are facing higher Inflation The increase in the general price level. The original meaning (literally “to blow up”) is monetary inflation, which means that the amount of money increases. Today, inflation primarily refers to price inflation. This means an implicit monetary depreciation. This causes the purchasing power to drop. inflation and a higher cost of living than in Europe — a direct consequence of the import tariffs.

Second, the US business community is also losing patience. Companies have already announced plans to seek reimbursement of up to 175 billion dollars in import duties they have paid to the federal government.

Finally, Johan Van Overtveldt notes that criticism is also increasing within the Republican Party itself, as the midterm elections draw closer.

The US budget deficit as an alternative pressure tool

Johan Van Overtveldt warns against escalating into a full-blown trade war. “Europe is the most open economy in the world. It has absolutely nothing to gain from fuelling this dispute further.”

Instead of engaging in tit-for-tat trade measures, he suggests targeting the financing of the massive US budget deficit. “Europe could assign a higher risk weighting to US government Bonds A loan to a company or a government, which is paid back with interest. In contrast to shares, most bonds have a fixed duration and a fixed interest, which is usually paid out on an annual basis. Therefore, as a general rule, bonds have less risk than shares. bonds in its financial regulations. That would make institutional investors less inclined to finance US debt. In that way, Europe could hit back at President Donald Trump,” Johan Van Overtveldt concluded.