Trump's tariffs could prompt European companies to set up operations in the United States

The expression "When America sneezes, the world catches a cold" describes the tendency of what happens in the United States to affect the global economy.

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Trump's plan to stimulate the economy includes tariffs of 10-20 % on imports and up to 60 % on Chinese products. What impact could this have on European food exports to the United States?

The American market is the largest in Europe. In 2010, the EU exported €27 billion worth of food and drink to the United States.FoodDrinkEurope reports that the number of people eating out in Europe has increased by 19% since last year.

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The US imports a wide range of products from the EU, such as beer, wine and spirits, canned fruits and vegetables, chocolates, olive oils, cheeses, chocolates, etc. Could European food companies be negatively affected by tariffs?

Cyrille Flott, Global Strategist for Consumer Foods, Packaging and Logistics at Rabobank, said that if tariffs were imposed, it would not be “good news” for European food and beverage companies.

Trump's tariffs on EU trade and their impact

Filott said that while tariffs are not a certainty, Europe will undoubtedly oppose them if Trump imposes them.

Some economists suggest that the American consumer may have to bear the burden of the additional costs.

Filott said other ways to counter the tariffs include reducing exports to the states or opening up European businesses to the United States.

As a last resort, European companies could also lower their prices. However, this would reduce profits.

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"I'm not very worried [about 10% tariffs]," Filott replied. He admitted that anything above 10 % is alarming.

However, the interest of European manufacturers in the US is growth, especially for private labels. Business here would be difficult if there were additional costs, as it is a more competitive segment in terms of price.

Can European companies set up in the United States?

Trump wants to encourage international companies, such as European companies, to do business in the US by imposing tariffs. This would not only avoid additional costs for EU companies, but would also create more jobs in America – one of Trump's campaign promises.

Can European companies make a similar change? They already are. Many European bakeries have purchased facilities in the United States.Investments are expected to increase even before the US presidential election.

You can find out more here It is even predicted that American bakeries will become more active in Europe, acquiring larger European bakery companies..

Filott said a European frozen bakery with a large contract to supply pastries to a U.S. retailer would benefit from the continued agreement.

If they can guarantee the same production and quality, they would be better off buying or building a factory here in the United States. He predicts that "that's what could happen."

Filott suggested that Trump's tariffs could actually prompt some companies to accelerate their U.S. expansion plans if they were implemented.

Many have speculated that Trump might offer companies a two-year subsidy (two years without tariffs) in exchange for a commitment to build something in the United States.