Today, the European Commission urged EU member states to exercise caution in their budgetary responses to the tariffs recently announced by the United States, particularly following Portugal’s announcement of a €10 billion support package for exporting companies.
“Our initial assessment from the European Commission is that we must approach our budgetary response with caution. We have experienced the COVID-19 pandemic, navigated an energy crisis due to Russia’s aggression in Ukraine, and are currently facing significant security challenges alongside elevated deficits and debt,” stated European Commissioner for Economy, Valdis Dombrovskis.
During a press conference on the first day of the informal meeting of EU finance ministers in Warsaw, which was influenced by escalating trade tensions due to new U.S. protectionist measures, Dombrovskis stressed the importance of keeping budgetary sustainability in mind.
Responding to inquiries about potential support for the sectors most impacted by these tariffs, the easing of state aid regulations, or other measures following the responses from Portugal and Spain, Dombrovskis noted the lack of in-depth discussions regarding specific sectors at the Ecofin meeting.
On Thursday, the Portuguese Government unveiled a support package exceeding €10 billion aimed at aiding exporting companies, which includes lines of credit, credit insurance, and enhanced support for international expansion.
Portuguese Finance Minister, Joaquim Miranda Sarmento, indicated that this initiative—featuring loans, insurance lines, and European funds—will be activated within weeks following consultations with the European Commission.
While Dombrovskis did not specifically reference Portugal’s announcement, he highlighted that the Commission is currently concentrating on macroeconomic factors, including the tariffs’ effects on growth, inflation, and market volatility.
Discussions among eurozone finance ministers today revolved around the economic implications of the new U.S. tariffs, amidst a sense of relief following the U.S.’s announcement of a temporary suspension, a pause likewise adopted by the EU.
According to estimates released today by the European Commission, the newly imposed U.S. tariffs could result in a GDP loss of 0.8% to 1.4% by 2027, with a projected 0.2% impact for the EU. In a worst-case scenario, where the tariffs become permanent or trigger further countermeasures, the economic fallout could escalate to a 3.1% to 3.3% reduction for the U.S. and 0.5% to 0.6% for the EU.
On a global scale, the Commission anticipates a 1.2% decline in world GDP and a 7.7% drop in global trade over the next three years.
Additionally, European Commissioner for the Union of Savings and Investments, Maria Luís Albuquerque, commented today to Lusa that this initiative “enhances Europe’s capacity to withstand external shocks and market disruptions, while supporting innovation and economic growth, and fostering conditions for improving the profitability of citizens’ savings in Europe.”
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