Economic surveys that are falling, productivity at half mast, an unemployment rate that is rising… Between the start of 2024, when the government was banking on an “OG effect” and the current period marked by a feeling of loss of control, the contrast is striking. Two elements pushed France towards the doldrums: the dissolution of the National Assembly announced by Emmanuel Macron in June and the slippage in public finances, unprecedented outside of times of crisis. How to bounce back? The slightest headwind today seems capable of plunging the country into the start of a recession. Will the fatal blow come from the bond markets? Unless the trade war or bad weather destroys several sections of our economy, already bloodless even before any budgetary effort. L’Express reviews the main risks facing the new tandem of ministers Eric Lombard (Economy) and Amélie de Montchalin (Budget).
In Cognac, lately, the producers of the precious beverage have had bad days ahead of them. The return of Donald Trump to the White House in mid-January is enough to give them a headache. While 98% of cognac production is shipped abroad, the American market alone absorbs 35% of French exports. Here, everyone still remembers these few months of 2021 when, in retaliation for a dark battle between Brussels and Washington over state aid for aeronautics, the American president imposed a 25% surcharge on bottles. . Upon his election, Biden suspended the measure. But the threat is back. “Trump’s second term will not be a simple extension of his first. For Europe and France, the context is much more dangerous, both politically, economically and security-wise,” worries Sébastien Jean, professor. at the National Conservatory of Arts and Crafts.
Trump II worse than Trump I
If the future president sometimes plays the weather vanes, he has some hoaxes. And the increase in customs duties is one of them. “In 2017, the increase in customs taxes was targeted, progressive and Trump favored the technique of import quotas. There, he is more aggressive and the effect will be harsher,” fears Julien Marcilly, the chief economist of Global Sovereign Advisory. How bitter will the potion be? It all depends on the direction of the wind. At the start of the campaign, the Republican candidate announced an increase in customs taxes of 10% on all European products and, a few weeks later, put forward the figure of 20%…
America represents 45 billion euros in sales of Made in France products, or almost 8% of our global deliveries. With sectors very exposed to American demand, such as luxury, wines and spirits but also aeronautical and automobile equipment, pharmacy and certain branches of chemistry.
The problem is that these trade tensions with Washington will also have indirect effects on French growth. Germany, for which the United States constitutes a very large market, will be all the more weakened as the country is barely emerging from recession. However, the prolonged breakdown of German industry is already having repercussions in France. Likewise, Europe could be the collateral victim of a harsher trade conflict between the United States and China. Trump has already threatened Beijing with customs surcharges of almost 60% on average. To keep its factories running, Beijing could then decide to redirect part of its exports towards Europe, like what the country is already doing with electric vehicles.
Blackmail of Ukraine
Can Europe join in the bidding war with Donald Trump? “She risks being quickly stuck in the escalation of her response because the American president will skillfully link economic questions to security issues. Are we ready, we Europeans, to no longer have any American support in Ukraine?”, s asks Sébastien Jean.
It remains to estimate the impact of this standoff on French growth. In their latest projections, Allianz experts bet on a middle scenario, imagining that Trump would not carry out all of his threats. “The trade war could then reduce French growth by at least 0.5% in 2025. We could even experience a brief recession,” fears Maxime Darmet, the chief economist for France at Allianz. A dark scenario which will undoubtedly complicate the French budgetary equation.
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