From the Green deal to the Carbon border adjustment, Brussels introduces new environmental tariffs that affect industry, agriculture and consumers. Between political contradictions, tensions with the USA and China and inflationary risks, Europe is changing its face.
From Sturmtruppen, given the obsessive reference to armaments that recalls Bonvi’s ramshackle comic book army, to Von der Trumpen it’s a moment. Baroness Ursula is leading Europe towards a horizon of economic contradictions. Until yesterday, a sworn enemy of duties today, in homage and as a result of the Green deal which has never gone out of fashion in Brussels, risks exploding with new ones “green” tariffs the production costs of at least twenty industrial sectors and to trigger a customs war with China having the farmers pay.
On April 1st of last year he announced: “If Trump imposes tariffs on us, we are very ready to take revenge.” On July 23 he said: «If Trump imposes tariffs, we will impose just as many: we have ready a package of goods – planes, motorcycles but also jeans and soybeans as well as bourbon – worth 100 billion on which to impose a customs tariff of 30 percent». But a week later a 15 percent tariff agreement was signed in Scotland. The package also includes 750 billion to invest in the USA, the purchase of liquefied gas for 600 billion which makes Europe almost entirely dependent on the American energy source.
Ursula von der Leyen, the former enemy of tariffs, joins Trump at the press conference and says: “We did it.” She was interested in defending steel, aluminum and European carsat least this is what she tells Mario Draghi who criticizes her and responds indirectly: «Imagine for a moment if the two largest economies of the democratic world had failed to reach an agreement and had started a trade war. This would have been celebrated only in Moscow and Beijing.” But then he adds: «Customs tariffs are taxes that burden consumers and businesses, increase costs, reduce choice and undermine the competitiveness of economies». It was last August 24th.
Cbam and the price of environmentalism
We are in the first days of January and Ursula’s metamorphosis from von der Leyen to von der Trumpen takes place: it triggers a list of additional customs fees onerous and extensive which strike, coincidentally, aluminium, steel, electricity, fertilisers (but perhaps those arriving from Ukraine will have zero tariff). The law has been in force since January 1st Carbon border adjustment mechanism (Cbam)the European Union’s new mechanism to tax embodied carbon in imported goods.
Brussels succeeds in the masterpiece of having destroyed the European manufacturing – automotive first and foremost – and always in the name of environmentalism to prevent surviving companies from sourcing abroad. The case of steel is emblematic: Europe is worth no more than 8 percent of world production, but anyone who has to build with that material will pay a duty from tomorrow. A conservative estimate says that solar panels could rise in price by 10 percent, cement by 15 percent, aluminum by up to 25 percent.
Italy under pressure
He calculated the impact on Italy Confartigianato. President Marco Granelli estimates that «the environmental taxation it weighs on citizens and entrepreneurs 11.1 billion more than the EU average, equal to 188 euros per capita in higher costs”. According to Confartigianato, the environmental tax levy in Italy it reached 54.2 billion, equal to 2.5 percent of GDP, a value 0.5 points higher than the European average. And this, despite our per capita environmental impact being 8.4 percent lower than the continental average.
All are on a war footing business associations. For Federacciai they are “bureaucratic burdens and scary tax burdens” which will have a boomerang effect, forcing many companies to relocate. Federchimica claims that it is impossible to monitor supply chains to certify the level of emissions of imported goods on which to calculate duties.
Inflation, rates and trade war
In practice, Cbam forces companies – already subject to tax with the regime of Ets – to keep the environmental accounts of imported products: at the end of the year they will have to pay the duties and if they make mistakes they are subject to very harsh sanctions. The consequences on the European economy are announced as very serious with a surge ininflationbut also with one competitive disparity.
German Chancellor Friedrich Merz has already passed a law to support energy-intensive companies that will pay a maximum of 5 cents per kilowatt hour for electricity with an outlay by the German government estimated at 8 billion. Brussels is careful not to define all this state aid, but the gap in energy costs between Italian and German companies is becoming unsustainable.
And, as if that wasn’t enough, Von der Leyen opened one trade war with China. New tariffs on parquet and plywood have triggered Beijing’s response with tariffs on European dairy products, pork and wine.
Isabel Schnabel and Christine Lagarde have prepared Europe for a rise in taxi: the new tariffs could generate an increase in inflation of six to eight tenths of a point. America is running at 3 percent growth, Europe remains stuck at around 1. These numbers illustrate the difference between Von Trumpen and Trump; the original, even if it involves duties, always has greater value.
