Experts caution against speculating over possible effects of Trump tariffs

It is hard at this point in time to assess the impact of newly inaugurated President of the United States Donald Trump on the global and European economies, some economic analysts in Estonia say, since it is unclear which pledges he will get to fulfill, and to what extent.
On the one hand, Trump's proposed tariffs would likely have a negative impact on European trade; on the other, his actions could help reduce energy prices, which would have a net positive effect on the economies of these countries, experts argue.
Speaking to "Aktuaalne kaamera" on the day of Trump's inauguration, economic analyst at SEB Pank Mihkel Nestor said: "Trump's negotiation tactic is to instill shock and awe, forcing everyone into a weaker position at the negotiating table, but where we will ultimately end up with that, we cannot say."
"It is impossible to understand exactly what he aims to achieve with these tariffs, be it to protect domestic industry, penalize someone, secure better negotiating terms, or to pressure others to make concessions to the U.S. It's unclear, but tariffs will certainly have a dampening effect on the economy [of Estonia]," Nestor went on.

Meanwhile Peeter Koppel, head of investments at Redgate Wealth, said: "I suspect this is all about creating a stronger negotiating position," with respect to tariffs.
Trump could then conduct trade negotiations from a position of strength, he argued, since exports constitute a relatively modest part of the U.S. economy compared with many of its trading partners.
As for the potential fall in energy prices in Europe, Nestor said: "Trump has promised significant steps; slowing the green transition on the one hand and simplifying fossil fuel extraction, including oil and natural gas, to boost production and smooth the way for exports, on the other. This could exert a major impact on the global economy, favorably affecting prices."
On this Koppel said: "There has been talk of late about a 'three-three-three' combination: At least 3 percent economic growth, 3 million more barrels of oil per day, and a budgetary deficit of 3 percent or less. If we take fossil fuels and U.S. economic growth into consideration, this will also somewhat support global growth."

Tariffs would affect Estonia's economy via export partners, primarily Finland, Sweden, and Germany. Direct trade relations with the U.S. and Estonia principally involve narrower sectors, such as the electronics sector.
This, again, is assuming tariffs or tariffs in this area even materialize.

Arno Kolk, chief of the Estonian electronics industry association (Elektroonikatööstuse liit), told "Aktuaalne kaamera": "Even in the electronics industry, the U.S. is vital, as many firms have been exporting large quantities of telecommunications equipment and other electronics there. However, it remains unclear what will happen with tariffs or even if they will happen at all. There is no point in speculating."
The imposition of tariffs on imports by one country tends to be mirrored by tariffs from other countries in any case.
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Editor: Andrew Whyte, Mari Peegel