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Experts Downplay Impact of Potential US Tariffs on Greece’s Economy

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US tariffs Greece
The Greek economy is not largely exposed to exports to the US. Credit: Greek Reporter

Economists in Greece argue that President Trump’s potential tariffs on the EU will have little impact on the Greek economy, as it is not significantly reliant on exports to the US.

According to new research published in the bulletin of the Eurobank Analysis and Research Group, in the first 11 months of 2024, the weight of the US on the total of Greek exports of goods was around 4.8 percent or 2.2 billion at current prices. In the same period, the value of Greek imports of goods from the US amounted to €2 billion. Therefore, the trade balance between Greece and the US was in surplus at €200 million.

Among the individual categories of goods, food and live animals recorded the largest surplus (€521.6 million) and fossil fuels, and lubricants, the largest deficit (-€399.0 million).

For the full year 2024, Greece’s merchandise exports to the US are expected to stand at 1.0 percent of GDP.

Direct and indirect effects of US tariffs for Greece

The research points out, however, that in addition to direct effects, the effects on the Greek economy from possible protectionist policies on the part of the US may also be indirect.

Indirect effects may come from Greece’s trade ties with the European Union of 27 member states, as around 20 percent of EU-27 exports of goods are purchased by US entities.

A possible increase in tariffs on products imported by the US from the EU27 could negatively affect a portion of Greek exports of goods to the US, Eurobank notes.

Specifically, in the 11 months Jan-Nov of 2024 the EU-27 share of total Greek merchandise exports was around 55.3 percent or €25.4 billion and the US share of total EU-27 merchandise exports (excluding exports between the 27 Member States) was around 20.6 percent or €490.1 billion.

The extent to which Greek exports of goods to the US will ultimately be affected will depend on the level of the potential tariff increase and the sensitivity of Greek exports of goods to the US to tariff increases.

The research also points out that a part of Greek exports of goods to the EU-27 concerns intermediate goods used for the production of final goods that the EU-27 exports to the US (participation of the Greek economy in European value chains). This is an additional channel through which there may be impacts on Greek exports of goods.

Greece does not expect significant effects from US tariffs

The Governor of the Bank of Greece is also on the same wavelength

“In Greece, we do not expect any particular effects, because the Greek economy is not largely exposed to exports to the US, but there will be indirect effects,” the Governor of the Bank of Greece, Yiannis Stournaras said.

“However, if tariffs are imposed in Europe and they are, for example, 10 percent, the effects on Europe’s economic growth will be in the order of half to one percentage point over a two-year horizon (estimates vary). As for European inflation, it is not expected to be substantially affected by the tariffs, however, there will be more general stagflationary trends in the global economy,” he added.

“We have calculated that Greece will show this year by “…a growth rate of 2.5%, a performance that is directly related to a growth rate in the Eurozone of 1.1%. So if the rate in the Eurozone slows down, as I mentioned above, due to the imposition of tariffs, there will obviously be an impact on Greek GDP, but not a significant one,” Stournaras pointed out.

Related: Trade Truce: Trump Delays Tariffs on Mexico, Canada

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