S. economy, reduce real incomes, and disrupt global trade patterns, with a significant impact on the European Union.
A serious shift towards protectionism
According to the report, the United States under the second Trump administration abruptly turned to protectionist policies. The sharp increase in tariffs is intended to make imported goods more expensive so that consumers and companies switch to American-made products. At the same time, the U.
S. government expects higher tariff revenues to strengthen the federal budget.
However, Motowski emphasizes that "economic adjustments caused by large tariff increases rarely occur in a simple or free way," pointing out that these perceived benefits are opposed by several forces.
Why higher tariffs could harm the U.
S. economy
While tariffs do redirect some of the demand away from foreign goods, the report highlights several challenges that arise within the U.
S. economy.:
• Imported materials are becoming more expensive, which increases production costs for manufacturers. • The purchasing power of workers decreases as the prices of everyday goods rise. • Increased domestic demand leads to higher local prices and the overall cost of living. • U.
S. exporters are losing competitiveness because higher costs make their products more expensive abroad.
Collectively, these effects slow down economic activity and lead to a recession in the United States. GDP. "[ ]While tariffs may create additional fiscal space for the U.
S. government, most of their burden falls on domestic firms and households, which face lower real incomes due to higher consumer prices or lower profit margins, at least until additional revenue from tariffs is They were returned to them through tax cuts or transfers," Motowski said.
How does this affect the EU
The report shows that the EU is also being influenced by US tariffs hikes. The EU's GDP is declining moderately, mainly because European exporters sell less to the United States. On the other hand, EU companies gain additional positions in third markets, where American exporters lose competitiveness due to higher domestic costs.
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