It could have major consequences for the economies of both the USA, Mexico and Canada if the US President, Donald Trump, takes his threats seriously and introduces a punitive tariff. But it will also be felt in the Danish economy.
An analysis from the Confederation of Danish Industry shows that the punitive tariff will mean that Denmark's gross domestic product (GDP) will be DKK 23 billion lower in 2027 than in the scenario with unchanged tariffs. At the same time, according to the analysis, it will mean that employment in Denmark will be reduced by 6,000 people in 2027.
The analysis assumes that the USA will raise the tariff rate on goods from Mexico and Canada from the first quarter of 2025 onwards. It is assumed that Mexico and Canada will retaliate in full.
If the tariff becomes a reality, Danish companies with production in Canada or Mexico and exports to the USA will start to feel the consequences after a few weeks. This is according to Peter Bay Kirkegaard, senior chief consultant for global trade and investments at the Confederation of Danish Industry.
- Companies have already prepared by building up stocks in the US. But if it takes much more than a few weeks, it will start to create problems, because then the stocks will be depleted, and then they will have to get new goods to the US, he says.
May have broad consequences
Donald Trump has maintained his threat to introduce a 25 percent tariff on goods from Canada and Mexico and ten percent on goods from China. The tariff is set to come into effect on Saturday, February 1.
First, companies with production in the applicable countries will be affected. But in the longer term, it will have broader consequences in the Danish economy, says Peter Bay Kirkegaard.
- Danish companies that produce in Denmark and sell to the US market will experience lower demand. The tariff means that American consumers will be able to afford fewer Danish goods, he says.
In the very short term, however, there may also be a competitive advantage for companies with Canadian or Mexican competitors who are affected by the tariff. But many of the things that the United States imports from Mexico and Canada are not something that Danish companies produce much of, explains Peter Bay Kirkegaard.
This applies, for example, to oil, which the United States imports a lot of from Canada, and fruit and vegetables, which are imported from Mexico.
- They also buy a lot of components for the automotive industry, but it is difficult for us to replace in the short term, says Peter Bay Kirkegaard.
/ritzau/
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