Impact of the US-EU Agreement on Portugal's Economy
In the latest episode of Economia dia a dia, Expresso's daily podcast, host Juliana Simões delves into an analysis by Gonçalo Almeida, a journalist from the Economy section of Expresso, regarding the potential effects of the newly implemented US-EU trade agreement on Portugal's economy.
The new agreement, which includes a 15% tariff, has raised concerns among Portuguese government and business representatives. The Ministry of Economy described the deal as a limited improvement that falls short of genuine free trade, while the Confederation of Portuguese Business labelled the relief from the agreement as "relative," warning that the increased tariffs disadvantage European producers compared to US rates.
The Socialist Party questions Portugal's involvement in the negotiations, pointing to a need for reciprocity, and noting that the UK’s post-Brexit deal has a lower tariff rate of 10% compared to the EU’s 15%. Despite the deal offering economic stability and helping "de-escalation," as described by Prime Minister Luís Montenegro, new challenges remain.
The 15% tariff increases trade costs for Portugal and the EU, imposing a competitive disadvantage on affected goods and likely dampening export-driven growth. Although the agreement avoids the worst-case scenario of much higher tariff rates, it is expected to reduce growth in the euro area (and by extension Portugal) by about 0.5%.
The agreement also involves commitments from the EU to purchase significant amounts of US energy and invest in the US economy, which could have more indirect effects on trade relations and economic activity.
In broader terms, the cancellation of the threat of 30% tariffs, which would have caused more severe economic disruptions, is a positive aspect of the agreement. However, the imposition of tariffs that may raise export prices or reduce exporters' profit margins, impacting export revenues, is a concern.
In conclusion, the new US-EU trade agreement, with its 15% tariff, increases trade costs for Portugal and the EU, imposes a competitive disadvantage on affected goods, and will likely dampen export-driven growth. While it avoids the worst-case scenario of much higher tariff rates, it is expected to have a negative impact on Portugal's economy. Tune into Economia dia a dia for more in-depth discussions on this topic and other economic matters.
The Ministry of Economy and the Confederation of Portuguese Business have expressed concerns about the potential economic impact of the newly implemented US-EU trade agreement, which imposes a 15% tariff, on Portugal's businesses. The Socialist Party also questions Portugal's involvement in the negotiations due to the higher tariff rate compared to the UK’s post-Brexit deal.
The increased tariffs could raise trade costs, impose a competitive disadvantage on affected goods, and potentially dampen export-driven growth in Portugal, contributing to a negative impact on its economy.
