(Bloomberg) -- The unintended consequences of trade wars shouldn’t be underestimated, according to Austrian economy minister Margarete Schramboeck, who said protectionist measures are bound to hurt the nation imposing them.
Tariffs “are like a boomerang -- they always come back to the one who is sending it out,” Schramboeck said in an interview with Bloomberg on Wednesday.
Austria, which assumed the European Union’s six-month rotating presidency in July, will have a key role in setting the bloc’s agenda through 2018, just as relations with the U.S. plumb a new low. The EU levied tariffs on 2.8 billion euros ($3.3 billion) of American goods last month in retaliation for Washington’s duties on steel and aluminum imports.
The European dispute is still limited compared to the trade war escalating between Beijing and Washington, which has threatened to raise import prices on almost half of everything the U.S. buys from China. A full-blown global trade war would shave 0.4 percentage point off world growth, according to Bloomberg Economics.
“Trade follows politics and politics follows trade,” Schramboeck said. “Wrong decisions on the political side will immediately lead to an impact on companies and especially on jobs.”
Schramboeck said that if the U.S. continues to isolate itself, the EU will instead focus on partnerships with other countries and on innovation, to make the bloc more competitive.
“The economy is too valuable to play games with,” she said. “Be it twitter games or other games.”
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