Europe: Export to US slump and tariff risks – Standard Chartered

⦿ Executive Snapshot

• What: EU exports to the US are contracting, raising concerns about tariff risks and trade deal ratification.
• Who: Christopher Graham from Standard Chartered, European Parliament, US trade authorities.
• Why it matters: The contraction in exports could signify deeper economic issues and affect future EU-US trade relations.

⦿ Key Developments

• EU exports to the US are contracting at rates comparable to those during COVID-19 and the GFC.
• The EU-US trade deal, which caps most US tariffs at 15%, is still unratified by the European side.
• Extra-EU exports are declining, but not as severely as exports to the US, with offsets from stronger sales to Switzerland and the UK.

⦿ Strategic Context

• The current situation reflects concerns about the long-term sustainability of EU exports to the US amid tariff uncertainties.
• Historical precedents of trade disruptions during economic crises highlight the fragility of international trade relationships.

⦿ Strategic Implications

• Immediate implications may include heightened tensions between the EU and US if tariff disputes escalate due to delays in ratifying the trade deal.
• Long-term operational impacts could include a permanent shift in export dynamics between the EU and US, affecting economic growth.

⦿ Risks & Constraints

• Regulatory risks include potential delays in ratifying the EU-US trade deal and the possibility of increased US tariffs.
• Competition from other markets may hinder the recovery of EU exports if trade relationships do not stabilize.

⦿ Watchlist / Forward Signals

• Watch for the ratification timeline of the EU-US trade deal and any new clauses that may be introduced by the European Parliament.
• Future developments regarding US tariff adjustments will signal the success or failure of trade negotiations between the EU and US.