Finland’s Minister of Foreign Trade and Development Kai Mykkänen (NCP) says the biggest threat to Finland’s continued economic recovery would be a trade war between America and China.
“We cannot afford to be bogged down in protectionism” Mykkänen says, noting in particular that any trade dispute between powerhouses America and China could have a paralzying effect on the global economy.
Finland would lose almost €180 million in added value if the US raised import duties for goods from Mexico and China, according to new research published today by Finland’s Enterprise Research Institute ETLA.
The reason is that in Finland, components are manufactured which are then exported to China, and then finished goods are exported from China to the United States.
“Behind more and more products, there are complex and global value chains. In these chains, the way from raw material to finished product often goes through many countries” says ETLA’s Deputy Managing Director Jyrki Ali-Yrkkö.
If the threatened US increases were also applied to products imported from the EU, the value added loss for Finland, according to the research, would amount to more than €1 billion.
According to the calculations, an increase of just 5% five would already cause a loss of €450 million for Finland. If the increase is 15 percent, the loss would amount to €1.2 billion.
US President Donald Trump has repeatedly mentioned an increase in import duties and tariffs, especially in the case of goods from China and Mexico, but possibly also the EU.
The goal is to get back jobs from China and Mexico to the United States.
‘Serious Consequences for Finland’
“If the United States puts up obstacles to imports from, for example, China, it is easy to take countermeasures that can lead to serious consequences also for Finland and the EU” says Minister Mykkänen.
According to Mykkänen the risk of an American and Chinese trade war would be significant.
“US President Donald Trump has made it clear that he is taking action to protect US production from Chinese exports. China is careful to be ready if something comes. I believe this is the greatest risk to exports from Finland” says Mykkänen.
On the other hand, notes the Minister, it is possible that despite all the tough talk, trade relations between the USA and China will not change, but carry on as usual.
“In the spring after talks, the United States and China agreed to facilitate trade in certain food products” explains Mykkänen.