Together with Britain, Norway and Switzerland, the continent’s GDP reaches $24.5trn, almost as big as America’s $29trn. American firms, from brewers to banks, would like to continue doing business in that market. That is the premise of Europe’s retaliatory tariffs, which will fall initially on easily substitutable luxury goods, such as Harley-Davidson motorcycles and whisky.
What can I say? I like it.
But then there's also this:
The hitch is that tariffs or other restrictions on imports from America hurt European consumers as well as American exporters. A case in point is Europe’s biggest import from America, energy. Last year it gobbled up 35% of America’s exports of crude and refined oil. More than half of America’s LNG went to Europe, too. Demand from the bloc, which may well keep rising long into the 2030s, underwrites many of the multibillion-dollar gas-export projects under development in America. Were Europe to curtail LNG purchases from America, many American energy firms would be in trouble. But it is hard for Europe to do this without crippling its already limping economy or again becoming dependent on Russia, an alarming predicament from which it has only just escaped.
Not so good.
But however I look at this (and other stories of destroyed relationships with yet another country), it always looks like US economy is the biggest loser.
A more plausible, albeit for the moment entirely hypothetical, target is America’s tech giants. Europe can probably do without Instagram, a social network owned by Meta, for instance, but Meta would be hit hard by the loss of European revenue. Europe has lots of ways to make life difficult for such firms short of banning them from European markets, including taxation and competition policy. This allows it to calibrate the torment, gradually tightening the screws if need be.
nnnyaarrghh, stop! I can only get so hard. 🍆💦