A trade war between China and the US poses a risk to the economic stability and growth of the Netherlands. The Central Planning Bureau (CPB) said in the Financial Market Risk Report 2024, which it draws annually at the request of the CPB House of Representatives. Although the Dutch economy is in “average good shape” after the coronavirus and energy crisis, it remains sensitive to “major economic shocks”. However, Dutch households and companies will absorb any blow better than a few years ago.

A key reason for the CPB’s alarm is the increase in import tariffs the United States introduced in May on Chinese goods such as electric cars. These could mean an escalating trade war between the two superpowers, with the Netherlands seeing more bankruptcies as its economy has to make “costly shock-by-shock adjustments”. Disruptions in production capacity and supply chains can drive up prices.

With one of the largest levels of foreign investment in the world, the Netherlands’ exposure to economic risks abroad also plays a role. For example, this is done through pension funds. Together with families, they risk not being able to repay their own debt in the Netherlands if they make losses on investments abroad. “When foreign assets are undervalued, this hits the Dutch people directly in their investing pockets,” CPB writes.

However, most Dutch investments are made in “relatively safe” countries such as the United States, the United Kingdom and Germany. The Netherlands is investing around 2,500 billion euros there. There is less investment in “risky” countries like China and Russia.

However, the risk of loss on foreign investments remains real. In contrast to the Netherlands, several countries have “significantly increased” debt levels, which could endanger economic stability there. Due to large foreign investments, the Netherlands is still “relatively heavily exposed”.

The state of large investment in the United States is an important issue. In the long term, a decline in the dollar cannot be ruled out, which could lead to a decline in the value of the Dutch investment position.