**Helsinki**: The unpredictability of U.S. tariff policies is causing significant concern for Finland’s economy, impacting exports and investment. Economists warn of potential harm to industrial production as Finnish exporters brace for possible retaliatory measures amidst shifting global trade dynamics.
The United States’ tariff policy is casting a significant shadow over Finland’s economy, with implications that are both direct and indirect. According to Juhana Brotherus, chief economist of the Finnish Entrepreneurs, the ever-changing landscape of U.S. tariffs raises a level of unpredictability that complicates economic forecasts. Speaking to Iltalehti, Brotherus noted that “this zigzagging means that just as easily, this could soon affect the United States and the EU.”
The ongoing tariff situation stems from a broader strategy employed by President Donald Trump, whose administration has used tariffs as a negotiating tool in international trade relations. Historically, tariffs have been levied unexpectedly and at times rapidly reversed. Notably, the President had earlier this year announced high tariffs on multiple trading partners, including China, Mexico, and Canada. However, just days later, he decided to delay certain tariffs on Mexico and Canada, affecting only a select range of products.
Brotherus highlighted that “tariffs are being used somewhat as negotiation tools for broader issues,” exemplifying how the Trump administration might link tariffs to discussions around various policy matters, including the drug issue at the U.S.-Canada border. This strategy has prompted significant uncertainty in both national economies and financial markets, which Brotherus described as “poison.”
The impact of these tariff changes has already resonated through global economic channels, appearing in lower U.S. stock indices and shaking international markets. Penna Urrila, chief economist of the Confederation of Finnish Industries, pointed out that the “fundamentally, the net effect of imposing such tariffs is negative in the overall picture,” implying that there is a consensus among economists that increased tariffs will hinder economic growth rather than enhance it.
In Finland, the implications are tangible. Approximately ten percent of Finland’s exports are directed towards the United States, including industrial machinery, forest products, and pharmaceuticals. Should the U.S. extend its tariffs to the EU, Finnish companies exporting to America could face significant challenges. Brotherus expressed concerns that such developments would harm the Finnish national economy, particularly industrial production, stating, “It would hit the Finnish national economy through weaker exports.”
Moreover, the uncertainty revolving around tariffs could result in cautious investment behaviour. Companies may hesitate to invest in Finland amid fears of escalating trade tensions. However, some economists acknowledge a potential silver lining: if Finnish exports are not subject to U.S. tariffs while those from competitors, such as Canada, are, this could enhance the competitive edge of Finnish products in international markets.
As the situation evolves, Urrila and Brotherus agreed that any U.S. tariffs on the EU would likely elicit counter-tariffs from European nations. These retaliatory measures could further complicate economic dynamics, as they would not only escalate trade tensions but also affect the pricing of products within the EU. Brotherus remarked on the complexity of a tariff war, where “political pressure forces one to respond to tariffs – you cannot just yield to them.”
The discourse on global trade is shifting towards negotiation skills. Brotherus suggested that the ability to successfully engage with U.S. policymakers is more critical than ever, especially as the White House could impose tariffs not just on the EU as a whole but also target specific countries.
In conclusion, the evolving U.S. tariff policies are creating a climate of uncertainty that extends beyond American borders and has reached Finland’s economy, necessitating close observation and strategic responses from Finnish industries and policymakers alike.
Source: Noah Wire Services
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