How will the additional tariffs imposed by Trump on the EU affect Turkey? Warning of high inflation

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Making statements at the first cabinet meeting held on Wednesday, Trump provided information about the tariffs to be imposed on Canada and Mexico. Reiterating that he would implement the tariffs, Trump alleged that the US has been subjected to mistreatment by its neighbors for years. Stating that the tariffs on Canada and Mexico will be implemented on April 2, Trump underscored that he would impose a 25 percent additional tariff on the EU. Economists stated that the additional tariffs Trump will impose on the EU could also create an inflationary effect on the Turkish economy.

The EU stated that it is ready to retaliate against Trump's tariff plans. The European Commission announced that it would respond 'firmly and immediately' to 'unfair' trade barriers. Expressing that the Trump administration's tariffs challenge legal and non-discriminatory policies, the EU pledged to protect European businesses, workers, and consumers.

HOW WILL THE TARIFFS SHAPE THE GLOBAL ECONOMY?

Trump's tariff plans have increased concerns about a global trade war. While the US's 10 percent tariff on China went into effect on February 4, China announced in response that it would impose tariffs ranging from 10 to 15 percent on coal, liquefied natural gas, crude oil, and agricultural machinery imported from the US.

According to a report by The Wall Street Journal, experts warned that Trump's tariffs could harm the US economy. Economists argued that the tariffs to be imposed on Canada and Mexico could backfire and negatively affect the US economy.

Trump responded to these criticisms via social media, saying:

''Tariffs will shift car production to Michigan and you will see domestic production increase rapidly.''

POSSIBLE EFFECTS ON TURKEY

Experts stated that the US tariffs could also have effects on the Turkish economy, noting that the rise in the dollar exchange rate could put pressure on the Turkish lira. According to analyses, additional tariffs could lead to raw material shortages in global markets and cause prices in Turkey to rise rapidly.

Speaking to BBC Turkish, Economist Hayri Kozanoğlu stated that high interest rates in the US could strengthen the dollar and that this situation could create indirect pressure on the Turkish lira. Kozanoğlu said, ''However, I think the lira can maintain its value thanks to Turkey's high interest rate policy.''

Arguing that Turkey cannot fill the void left by China due to high labor costs, Kozanoğlu stated the following:

''Turkey's failure to change its production patterns prevents it from being competitive.''

It is predicted that the tariffs the US will impose on the EU could slow down the European economy and negatively affect Turkey's exports.

EXPORTS MAY BE NEGATIVELY AFFECTED

Experts estimated that the 10 percent tariff the US will impose on the EU could reduce the EU's GDP by 0.3 percent within two years. It was pointed out that this situation could also negatively affect Turkey's exports to the EU.

Kozanoğlu said that price increases in imported consumer goods could be kept under control because exchange rate increases in Turkey remained below inflation. However, he added that the exchange rate effect would be felt more significantly in sectors such as clothing, footwear, white goods, and furniture.

It was announced that Turkey exported 1.5 billion dollars to the US in December 2024, and exports to the EU were 9.31 billion dollars. China, on the other hand, stood out with a 12 percent share in exports to Turkey. Experts emphasized that global trade wars would affect Turkey's export and import balance.

REMARKABLE POST FROM THE ISO PRESIDENT

Istanbul Chamber of Industry (ISO) Chairman of the Board Erdal Bahçıvan made a post on his social media account, pointing out that we are going through uncertain times. According to Bahçıvan, Turkey could be deeply affected by the additional tariffs to be imposed on the EU.

In his message shared on X, Bahçıvan argued that protectionism is rising instead of globalism and expressed the following:

''Significant developments that surprise people are taking place in the world system at a speed that no one expected or could have predicted. We are all witnessing a complete upheaval in global balances. Moreover, where the process will lead and what kind of new structures will emerge is a complete mystery.

While optimists believe that a new global balance will be formed through negotiation and dialogue, pessimists emphasize that the risk of a third world war is gradually increasing. So much so that the balances established in 1945 after the Second World War and international institutions, especially NATO, are being shaken, and Europe's future and security are being debated.

While extreme nationalist movements are reaching remarkable vote rates in different geographies, the competition to gain control over rare elements needed by the new generation of industry and production is intensifying.

In particular, the move away from globalism and the new protectionism, which we have been discussing for some time, as well as customs walls, have begun to leave their mark on the agendas of countries after the presidential elections held in the USA. Undoubtedly, these important developments closely concern our country as well. For example, very important developments are taking place in the European Union, our largest trading partner.

The systematic stagnation in the economies of the EU region, increasing income inequality, and the migration problem that has reached serious dimensions bring with them the rise of extreme nationalist political movements and the risks of political instability in the region.

The trend is very fast and shocking. We are facing a picture of dimensions that cannot be grasped with rote knowledge and stereotypical perspectives.

We will discuss all these developments at our February ISO Assembly meeting under the title 'Outlook on the Turkish economy in 2025 in the light of global developments: Risks and opportunities' together with our valuable panelists and esteemed industrialists.''