KIEL, Germany, March 26 (Xinhua) -- Washington's trade policies will heighten uncertainty and weigh on the world economy, with the U.S. economy likely to face the most severe consequences, a German economist has warned.

"The U.S. economy is likely to be the economy that's hit the hardest by all of this (policy)," Holger Goerg, professor of International Economics at the University of Kiel, told Xinhua in a recent interview.

Although it remains unclear whether the U.S. tariffs will lead to "a strong recession" or just an economic downturn, "it is very clear the United States hurts itself with this," said Goerg, also the director of the International Trade and Investment Research Center at Kiel Institute.

Tariffs hurt the economy by driving up inflation and reducing competitiveness, Goerg elaborated, adding that signs of a slowdown in the U.S. economy are emerging, including rising prices and dropping stock prices.

Amid a spate of new tariffs, the United States has imposed a 25 percent tariff on imported steel and aluminum products, triggering countermeasures by the EU.

In response, U.S. President Donald Trump has threatened further tariffs on EU imports if the countermeasures are not lifted.

If the clash spirals into a trade war, Goerg warned, "I think that's to nobody's benefit."

Goerg, also the director of the Kiel Centre for Globalization, expressed skepticism about the effectiveness of the current U.S. tariff policy, particularly its potential to shift production back to the United States.

He noted that the unpredictable nature of the Trump administration's tariff policies undermines long-term business planning, even though these policies are framed as a strategy to revitalize U.S. industries.

This inconsistency will create a highly uncertain environment for businesses, which "scares investors off" and makes it nearly impossible for them to make long-term strategic decisions.

On globalization, Goerg said the United States has historically benefited from lower prices and access to cutting-edge technologies, but it is now taking a step back.

"We are at a crossroads, and globalization may be under threat" as the largest economy in the world is not following international trade rules, Goerg noted. "If the international trade system breaks down, it would be the worst outcome for global markets."

At the critical moment for globalization, other major economies including the EU and China need to play more active roles in maintaining global trade stability, he said, emphasizing the importance and potential of cooperation between the EU and China. Enditem

Related

Go to Forum >>0 Comment(s)