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How to Confront Trump Business War



  • European companies could benefit from President Donald Trump's escalating trade war, analysts at Citi wrote to clients.

  • "Winning the trade war, albeit not from the sidelines anymore, remains a real opportunity for Europe," Citi said.

  • European corporates can steal market share from American firms in markets like China, while also benefitting in bilateral trade agreements as US influence wanes.

  • This could lead to both anger from Trump, and damage to the US economy.


WAR


As the developing exchange war between the Trump organization and whatever remains of the world undermines to bubble over, Europe and European organizations remain to be the greatest recipients — on the off chance that they play their cards right.

That's according to analysts at Citi, who believe the burgeoning conflict provides "a real opportunity" for Europe.
Citi's weekly European economics note, compiled by a team led by Christian Schultz argues that rising tariffs put in place by the Trump administration could allow European corporates to gain a competitive advantage over their American counterparts.

Winning the trade war, albeit not from the sidelines anymore, remains a real opportunity for Europe," the team wrote to clients late last week.
The team's thesis centers on two arguments.

To start with, the conviction that while duties will hurt the organizations of European organizations in the US, it will enable them to contend all the more forcefully with American firms in business sectors like China.


Second, that the EU can take advantage of the USA damaging its international reputation and become the global trading partner of choice for major economies.

"European companies compete with US firms in key markets such as China and could win market share at the expense of their American counterparts," Citi's analysts wrote.

As the US is putting taxes on Chinese products, and China has struck back in kind, it is likely that Chinese organizations would be more disposed to work with European organizations. This thusly would support the productivity of significant European corporates, which could likewise have a general positive effect on total national output.

That same favorability, Citi notes, would likely impact European Union negotiations over trade with economies all over the world. If the US looks as though it is closing itself off from the rest of the world in terms of trade, it is unlikely that states will be keen to strike deals with them.

By positioning itself as a bastion of free trade, the EU could benefit by gaining favorable terms in trade partnerships.
As Citi puts it: "The EU’s bargaining power in free-trade talks with third countries rises as the US is no longer an attractive alternative partner."

If these outcomes were to materialize, there would likely be two major consequences.

Initially, it is likely that European organizations taking piece of the pie from US organizations would negatively affect those organizations as far as gainfulness, yet in addition the more extensive US economy, and conceivably even worldwide development. 

"In case of a further perceptible decay in exchange strains that could reduce the pace of development in worldwide exchange, our outside request conjectures would probably be updated down," Citi's group composed.

Secondly, the move would likely anger President Trump, potentially leading to an even greater escalation of the conflict. Trump has not responded well to perceived slights on his policy, with his angry reaction to news that Harley Davidson would move some production out of the USA as a result of his tariffs a prime example.

Harley Davidson's turn spoken to a slap in the face for Trump. The president had facilitated organization officials at the White House and more than once lauded the organization for building its cruisers in America. 


Trump has in the past demonstrated readiness to rebuff those he sees to slight him, so European organizations profiting from the duties could confront a comparative treatment, perhaps being on the finish of significantly more taxes in the USA.


SOURCE : businessinsider