1. Impact on Maltese Exports and Industries

Trump’s protectionist views, specifically the proposed high tariffs on non-US goods, are the main cause of concern for Malta.

The proposed tariff, including a minimum 10% on all imports (including EU) and p to 60% on Chinese goods, aim to protect US industries.

The direct negative effect on Maltese exports going directly into the USA is very clear. However, what is even more concerning is how this will affect global supply chains.

Malta’s economy is closely tied to the global supply chains, with local companies providing components, such as electronic parts, to foreign manufacturers that expert the final product to the US.

If the US imposes high tariffs on these goods, US demand for these products will likely decreased due to higher prices. Maltese components will therefore be less in demand.

2. Potential EU Retaliation and Inflation

The EU is not expected to just sit idly by and will of course retaliate with measures of its own on US goods, as it has done in the past, even under the Biden administration.

This could increase the cost of American products in Europe, affecting Maltese consumers and business reliant on US imports.

3. A Flood of Products coming from Elsewhere

With restricted access to the US market, exporters from outside the EU would be forced to redirect their export into Europe.

Whilst this may be some good news for consumers, intensifying competition for manufacturers and service providers can created pressures on the labour market.

5. A Weaker Euro? Why Should I Care?

Higher tariffs may reduct the competitiveness of European exports in the US market, leading to a decrease in demand for the Euro as fewer transactions are conducted in the currency. Analysts at Goldman Sachs said the Euro could drop as much as 10 percent against the dollar.

Here is why you should care:

A weaker euro makes imports more expensive. This impacts prices for goods coming outside of the Euro area as  well as oil prices.

5. Decoupling from the US?

Whilst talk of decoupling may be too far, these added expenses, passed along the supply chain, would ultimately make European policymakers less willing to rely on the US as a trade partner.

The Eu would likely focus on building alliances with a diverse range of global players. The EU will look to strengthen trade ties with emerging economies and more importantly, resource-rich regions.

This is a collaborative article by Spunt.mt and Lovin Malta which provides bite-sized updates and deep-dive explainers at your fingertips.