EU Urges Caution as Portugal Proposes €10 Billion Export Support Plan

EU Calls for Fiscal Caution

The European Commission has urged caution regarding the fiscal responses of EU countries to the tariffs announced by the United States, following Portugal's announcement of a €10 billion support package for exporting companies.

Valdis Dombrovskis, the European Commissioner for Economy, emphasized the need for a careful approach, stating, "We must be a bit cautious in our fiscal response. We have faced the COVID-19 pandemic, an energy crisis due to Russia's aggression in Ukraine, serious security challenges, and we are dealing with high deficits and debt."

During a press conference after the first day of the informal meeting of EU finance ministers in Warsaw, Dombrovskis reiterated the importance of keeping fiscal sustainability in mind as tensions rise over new US protectionist policies.

The commissioner responded to inquiries about whether the EU plans to support the most affected sectors, relax strict rules on state aid, or introduce other measures, especially after countries like Portugal and Spain have already proposed responses.

On Thursday, the Portuguese government revealed a €10 billion package aimed at swiftly supporting exporting companies, which includes credit lines, credit insurance, and expanded support for internationalization.

Today, Finance Minister Joaquim Miranda Sarmento noted that this package, designed to assist Portuguese exporters against the US tariffs, will be implemented in a few weeks after discussions with the European Commission. The program will cater to exporting companies based in Portugal.

While Dombrovskis did not specifically mention the Portuguese package, he indicated that the Commission is currently focused on the macroeconomic impact of tariffs on current growth, inflation, and market volatility.

"We did not have in-depth discussions on specific sectors, although some of the support measures announced by member states were mentioned during the Ecofin meeting," he added.

Eurozone finance ministers today discussed the economic impact of the new US tariffs amid a sense of relief following the announcement of a temporary suspension by the US, which was also adopted by the EU.

Recent calculations from the European Commission suggest that the new US tariffs could lead to a loss of 0.8% to 1.4% in GDP by 2027, with the EU facing a 0.2% impact. In the worst-case scenario, should the tariffs become permanent or if other countermeasures are implemented, economic consequences could worsen to 3.1% to 3.3% for the US and 0.5% to 0.6% for the EU.

Globally, the Commission estimates a 1.2% loss in world GDP and a 7.7% decline in global trade over three years.

Additionally, in statements to Lusa, Maria Luís Albuquerque, the European Commissioner for Savings and Investment, highlighted that this initiative makes Europe better equipped to withstand external shocks and market turbulence while contributing to innovation and economic growth. It also aims to create conditions for enhancing the profitability of citizens' savings in Europe.