From “Maga” (Make Europe Great Again). President Donald Trump may pursue a new, “first America” ​​world, but in the fight for inflation control the United States can actually to come last, CNN comments on its analysis. This is because, while its duties are widely expected to raise prices in the domestic market, they could reduce inflation beyond the Atlantic Ocean.

The reasons are varying, ranging from a possible inflow of Chinese exports to low prices in Europe until the recent rise in the value of the euro. In addition to the benefit of consumer wallets, lower inflation will give European policy -makers to reduce interest rates if the economy needs help – while the US could find it difficult to reduce borrowing costs If the world’s largest economy needs a push.

This is just one way Trump could make Europe … “great again” (“Mega”) as Nomura’s economists, a global financial service group, put it in a recent research note.

Emergency analysts in the International Monetary Fund also see Trump’s duties leading to inflation higher in the US, they wrote in their latest report on the country’s prospects.

The main reason why the highest duties in the US will probably raise prices in America is because duties are taxes on importswhether it is finished products or accessories.

There are already indications that some companies will pass on the cost of duties to US consumers, Instead of absorbing it. For example, Adidas CEO said earlier this week that cost increases due to higher duties “will eventually cause price increases” in the US. Outside the US, “there is no reason” to raise prices due to duties, Bjorn Golden later added.

The impact on US duties introduced in 2018, during Trump’s first term, suggests that an increase in inflation is on the way. A 2019 study, signed by Mary Ami at the New York Federal Bank, found a “complete transfer” of these duties to domestic prices of imported goods.

Even non -duty companies may increase their prices. “Domestic producers increase their prices when their foreign competitors are forced to raise prices due to higher duties,” he said.

While Trump has already implemented an additional 10% duty to imports of goods from almost all countries, as well as much higher duties in some areas and a colossal duty on imports from China, the European Union has so far threatened only with limited duties as retaliation to US products.

The EU can still implement a stronger response, which could raise US import prices, but the impact on European inflation will be much lower than the US. This is because, unlike maximalist approach of Trump, Europe will “impose duties only on the imports of just one country,” George Buckley, a head of Europe for Europe in Nomura, told CNN.

As things are, economists say, Trump’s duties are more likely to slow inflation in the EU this year and year, in four ways.

The phenomenon of China

One is what Christine Lagarde, president of the European Central Bank, described China’s possible efforts to “redirect” its exports away from the US, possibly to Europe. “This would have a reduction in prices,” she told a Washington Post Live platform last week. More goods on the market mean more competition, which means lower prices for buyers.

Jack Reynolds, a senior economist at Capital Economics Consulting Company, explained in a note in April: “Increased competition from cheap Chinese imports could reduce the prices of goods … and with China dealing with at this stage much higher duties than they are discharge goods that would otherwise have been sent to the US. “

China is already sending much fewer products to the US, with industry data showing a fall in missions last month.

Trump’s policy changes is a double -edged knife: They have also led investors away from US assets – including the dollar. On the contrary, the euro has been reinforced since April 2, when Trump announced 10% duties in almost all countries and even higher tariffs on products from about 60 nations and commercial blocks, including the EU.

The euro has rose 3% against the coins of the eurozone’s main commercial partners, including the dollar, and is within walking distance of the historic high on April 22. A stronger currency makes imports cheaper, which generally leads to more goods, higher competition and, therefore, lower prices on the market.

The euro has been appreciated by 4% from April 2 only against the dollar.

“I think concerns about the US economy have dominated (in the dollar fall),” said Ruben Segura, head of economic research on Europe at Bank of America. “And secondly, I think many of the recent developments have created a risk premium for US financial assets.”

Preparation for the impact

Meanwhile, expectations for a hit in the world’s economy by Trump’s duties have led energy prices to lower levels than April 2, as traders predict reduced fuel demand.

Oil prices declined after his announcements on the “Liberation Day” duties. Brent -type crude oil, a worldwide reference, has lost 17% since then.

Natural gas prices have also declined, and even more rapidly in Europe than in the US. This could worsen, based on the forecasts of the World Bank published this week. According to the World Bank, gas prices in the US will be launched in 2025 in 2025, with another slight increase in 2026, while European prices are simply planned to increase mild this year and decrease next year.

Expectations for weaker economic growth have another, broader effect. In conjunction with extreme uncertainty about commercial policies, they discourage business spending and affect consumer confidence in Europe. This is the fourth price reduction, with economists predicting that consumers will eventually spend less.

While the trade war could slow price increases in Europe, there are still some factors that could push inflation higher in the region. One is the recent parliamentary approval in Germany, Europe’s largest economy, a plan to massive investment in infrastructure and defense. Another is the agreement of European leaders in March to increase defense spending.

But all of these costs will take some time to implement, Probably years.

And with the current level of global uncertainty, who knows what could have happened until then.