Analysts: US tariffs not a threat to Europe’s economy for now

A possible hike in tariffs on cars may hurt Slovakia.

(Source: Courtesy of USSK)

The imposition of tariffs on imports of steel and aluminium from the European Union (EU) to the US is bad news for international trade. Analysts believe that while it would not have any fundamental impact on Europe’s economy, they are getting nervous.

SkryťTurn off ads
Article continues after video advertisement
SkryťTurn off ads
Article continues after video advertisement

“In general, the aggregate economic impact of US tariffs on imports of steel and aluminium and counter-measures by the EU will be imperceptible for both economies,” said J&T Banka analyst Stanislav Pánis, as cited by the TASR newswire. “This is because the tariffs concern less than 0.5 percent of the eurozone’s exports to the USA and the EU’s reciprocal measures will affect a negligible volume of imports.”

SkryťTurn off ads

He did not expect any significant impact to Slovakia’s economy either.

“An ordinary consumer in Slovakia and the Slovak economy as such will in general not discern the currently announced measures and counter-measures,” said Pánis.

Last Thursday, May 31, US President Donald Trump announced that the US would impose 25 percent duty on steel and 10 percent on aluminium imported from the EU, Canada and Mexico. The move follows earlier metals tariffs on countries around the world. The EU responded that it will impose retaliatory tariffs on the €2.8 billion euros of American imports.

Read also: US steel and aluminium tariffs may have little impact on Slovakia, for now Read more 

The tariffs are not expected to have a direct impact on the steel maker U.S. Steel Košice (USSK) as the total import of steel and iron from Slovakia to the U.S. is small.

SkryťTurn off ads

A bigger problem is Europe as a whole. This is because if the demand for steel from European steelmakers decreases, this may result in a drop in prices. This will affect USSK because this will increase its competition. In 2016 Europe exported steel worth 23.3 billion US dollars to the U.S.

“It may happen that some companies supplying large volumes to the U.S. will re-direct a portion of their supplies to Europe,” said Ján Bača, USSK’s spokesperson, as cited by the Sme daily.

Import tariffs on cars

A much bigger problem for Slovakia and Europe would be if US President Donald Trump fulfils his promise and increases tariffs on cars. Trump indicated that the current tariffs on cars may rise from 2.5 percent to 10 percent.

Out of the three carmakers active in Slovakia only Volkswagen Slovakia exports cars directly to the U.S. Volkswagen exported to the U.S. 20 percent of its car production, almost 362,000 vehicles, in 2017, the Sme daily wrote.

In 2016 Slovakia exported cars worth about €1 billion to the U.S.. This made up more than 1.5 percent of Slovakia’s total exports. EU car exports to the U.S. were worth €37.7 billion.

Top stories

Janka, a blogger, during the inauguration of the first flight to Athens with Aegean Airlines at the airport in Bratislava on September 14, 2023.

A Czech rail operator connects Prague and Ukraine, Dominika Cibulková endorses Pellegrini, and Bratislava events.


Píšem or pišám?

"Do ľava," (to the left) I yelled, "Nie, do prava" (no, to the right), I gasped. "Dolšie," I screamed. "Nie, nie, horšie..." My Slovak girlfriend collapsed in laughter. Was it something I said?


Matthew J. Reynolds
Czech biochemist Jan Konvalinka.

Jan Konvalinka was expecting a pandemic before Covid-19 came along.


SkryťClose ad