Economist: Trump trying to use tariffs to get better deals elsewhere

U.S. President Donald Trump is attempting to use tariff policy to secure better terms for U.S. interests with various countries, said Luminor's Chief Economist Lenno Uusküla.
"From the very beginning, Trump's tariff policy has been about seeking better conditions — whether in trade, immigration, or other areas. He initially promised to impose tariffs on the first day, but when he took office, he delayed them until the end of the month. That was already a major concession, giving room for negotiations," Uusküla told Monday's "Ringvaade."
The postponement of tariffs on Mexico after a discussion between the two presidents on Monday indicates Trump is using tariffs as leverage for other deals, such as border control, the economist said.
"This means preventing illegal immigrants from entering the United States from Mexico and stopping drugs from crossing the border," he said.
Mexico has already announced that it will deploy 10,000 soldiers to guard the border.
"The border is long, so 10,000 sounds like a lot, but realistically, you cannot stop everything. There is plenty of work to do. The question is whether this one-month period will have an impact or not — whether any changes will be observed. There are likely additional conditions as well. Mexico must take back migrants, planes must be able to land. More aspects will be added," Uusküla explained.
Trump has said he fully intends to impose tariffs on the European Union.
"They don't take our cars, they don't take our farm products, they take almost nothing and we take everything from them. Millions of cars, tremendous amounts of food and farm products," the U.S. president told journalists on Monday.
"What he is looking at is the trade deficit. Americans buy our goods, but we do not buy theirs. That means their companies do not have work," Uusküla told the show.
"But looking at it from the other side, European agricultural products are highly competitive, and clearly, Europe does not allow American agricultural goods into its market. The general quality standards for food production in the U.S. do not meet what Europeans want to buy. Additionally, concerns over genetically modified organisms and other factors are much more strictly regulated in Europe," Uusküla said.
"He can halt the import of European goods into the United States and thereby eliminate the trade deficit," the economist added.
Uusküla said negotiations with the European Union also involve digital companies. "American tech giants have been able to operate in Europe quite freely. Now, Europe is setting stricter rules on their behavior, which the Americans certainly do not like," he said.
"I think he will indeed shut down part of the imports. Companies will no longer be able to sell to the U.S. and will have to find new markets," Uusküla said.
At the same time, Uusküla noted that the role of the United States in European trade is not very significant. "But specific companies will be greatly affected. That is where lobbying will come in, pushing for negotiations to reach some kind of compromise. That's how he secures better outcomes," he said.
If the U.S. imposes lower tariffs on the EU than China, Canada, and Mexico, many European countries would still be able to enter the U.S. market as they would be cheaper, Uusküla explained. This could affect Estonia's electronics industry, machinery, equipment, and wood products.
He also said tariffs in the U.S. will not lead to lower prices.
"No, prices will rise. Prices will definitely go up because cheaper production is not possible. If it were, Americans would already be producing more cheaply. However, more jobs in the manufacturing sector could be created," Uusküla said.
The economist added Estonians might feel the impact of tariffs on their wallets, particularly in fuel prices.
"If the dollar becomes more expensive, gasoline at our gas stations will also become more expensive," Uusküla explained.
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Editor: Aleksander Krjukov, Helen Wright
Source: Ringvaade