The Real Consequences of the Commercial Confrontation between China and the United States on Europe

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[...] It would then be indispensable that the trade negotiations between China and the United States are settled. But as a result of these expansionary monetary policies, we will undoubtedly achieve the depreciation of the Yuan and the dollar and by ricochet the appreciation of the euro. The second scenario would lead the American president to nationalize the FED. However, this will not take place before the 2020 presidential elections and his potential re-election. What will then be the orientations of the FED during this period? [...]

[...] The United States is the engine of the global economy. The current proliferation of these tariff constraints therefore risks harming all actors, despite the short-term benefits that some nations may derive from them. Although temporary, if this protectionism persists, adjustments may lead to a new momentum on international markets. As Mathilde Lemoine, chief economist of the Edmond de Rothschild group, notes for the case of China, the escalation of commercial tensions 'could also lead to a reconfiguration of global trade flows in intra-Asian trade'5. [...]

[...] This inability of Europeans to act collectively is risky: 'One of the scenarios, in the event of a bilateral agreement between the United States and China, is that Europe is left aside, analyzes Philippe Martin. For example, the Chinese could decide to buy more Boeing and less Airbus.' The economic prospects could even darken a bit more if the trade war directly affected the European continent. Faced with this observation, two scenarios are possible, considering as certain the American desire to pursue a policy that limits Chinese exports by playing on the depreciation of the dollar. [...]

[...] This would be rather negative for us, as it would be a form of dumping [selling products at low prices to conquer the market]'10. However, this situation can also have a positive turn since European goods not affected by these customs measures will be more competitive. As Philippe Martin points out: 'Potentially, Europe could export more to China and the United States. But it will depend on the sectors and it will not necessarily be easy to replace Chinese or American companies. For now, we do not know very well how to quantify this effect'11». [...]

[...] This scenario proves that these commercial disputes between the two nations have a global impact and therefore in Europe and therefore in France. In fact of smartphone sales in the hexagon are of the Chinese brand. This example shows that commercial tensions between the two major global powers directly affect Europe and France: approximately 20% of smartphones sold in the Hexagon are Huawei. Beyond telecommunications, it is the dynamism of the entire European economy that is under threat . As Laurence Boone, chief economist of the OECD, has expressed, 'the uncertain and very detrimental climate for investments, for confidence, is starting to create tensions on prices, which, necessarily, will start to erode purchasing power in a context where wages are not increasing very quickly'9 ». [...]