Trump’s tariffs and rising international tension fuel gloomy economic outlook

For Flemish companies exporting to the United States, there was bad news this week. US President Donald J. Trump announced that he will impose a ‘general’ 25 per cent import tariff on European goods ‘very soon’.

Earlier, he announced an identical tariff on steel and aluminium. Details about the new import tariffs are not yet available.

Up to €12 billion less due to tariffs

According to employers' organisation Voka, the new tariffs threaten to cost Flemish companies between 6 and 12 billion euros a year.

‘It’s above all the pharmaceutical and chemical sectors that will see their market reduced. The products they want to export will become 25% more expensive and that means US companies will no longer want to buy them,’ says Voka's managing director Hans Maertens.

President Trump's announcement fuels uncertainty among entrepreneurs. And that was already at very high levels. The Voka survey was conducted among 750 Flemish companies.

Half of all businesses see lower demand

2 out of every 3 companies say they take a negative to very negative view on the economic climate. Geopolitical tensions and uncertainty are a major cause of that pessimism. Companies need to rethink their international strategy and this complicates investment decisions, they say.

‘International uncertainty also puts pressure on companies. Can their strategies survive the rapidly evolving geopolitical situation? Companies need to be alert and agile. We also expect great alertness and agility from our governments. Our companies count on protection and foresight,’ Mr Maertens says.

Belgium’s economic climate is also worrying entrepreneurs. Half of all companies see orders currently running below normal levels and, according to the survey, the number of companies considering restructuring (and possibly lay-offs) is on the rise.

Lower levels of investments

Companies are warning that Belgium is becoming a less interesting place in which to invest. Doubts are growing, in particular among so-called energy-intensive companies, especially in the steel and chemicals sectors.

Only a quarter of energy-intensive companies still consider Belgium an attractive country in which to do business and invest.

International groups in particular seem ready to leave. One in three is no longer prepared to choose Belgium as a place to invest and one in three has its doubts. Only yesterday, steel giant ArcelorMittal signalled that without concrete measures from the EU, an announced major investment in its Ghent plant cannot go ahead.

Little hope of improvement

Entrepreneurs see little improvement in the short term. Half of them think the situation will worsen in the coming year.

‘Our companies are struggling month after month,’ Mr Maertens warns. He calls on the government to support them. ‘All governments, European, federal and Flemish, must now join forces and implement policies that will restore our competitiveness and productivity in the short term.’

Six out of 10 businesses already accept that the new federal government, thanks to its reform plans, is taking steps in the right direction. Half of all entrepreneurs do think efforts to shore up the budget will not be sufficient.