Trump's tariff war is hitting the US and Europe hard

The higher tariffs imposed by Trump on many countries are having a considerable impact on US companies. For 23% of all imports, US companies themselves have to bear the additional costs associated with the increase in tariffs. They cannot pass on this price increase. The US agri-food sector, in particular, has been hit hard. 

Johan Geeroms, our Risk Underwriting Director Benelux: "American companies that import products from abroad often have to pay much more due to increased customs duties. For most products, this price increase is passed on to American customers or consumers. But in sectors where prices are extremely elastic, this is not possible, as customers and consumers would then turn to competitors offering cheaper products. For these companies, it's a choice between two evils: passing on the additional import duties means losing revenue because customers will go elsewhere; not passing them on means taking a hit on margins and risking losses."

Many US importers are looking for new suppliers in other countries. We are witnessing a transformation of supply chains. US imports from China have fallen by nearly 20% this year. Countries such as Vietnam, India, and Thailand are benefiting from this: their exports, mainly consumer goods, to the US and Europe have increased by several tens of percent this year. Vietnam, for example, now holds 35% of the US shoe market, surpassing China as the leading supplier of shoes. 

Due to higher tariffs, European manufacturers are becoming much more expensive for US buyers. In order to stay competitive, European companies are practically forced to lower their prices, relocate their production, or drastically reduce their costs. Added to this are heavy administrative burdens that put additional pressure on profit margins. Consider, for example, the extra work involved in relocating production or finding alternative logistics routes.

With regard to Belgium, Johan Geeroms points to ports and groups in the chemical, pharmaceutical, and automotive industries as being the most vulnerable to the US tariff war. "Exporting companies in this sector, which are heavily dependent on the US market, are facing pressure on margins, export losses, and growing uncertainty about job security. The increase in customs duties also affects Belgian ports, particularly Antwerp-Bruges. The US is one of Belgium's three main trading partners for container traffic. Think of liquid bulk and car exports to the US."

Johan Geeroms also refers to the Flemish employers' organization Voka, which has warned that the tariff war could cost between 5,000 and 10,000 jobs in the short term.