The European Union has responded to the tariffs levied by the United States with new taxes on American imports, propelling both actors closer towards a trade war. Experts warn about far-reaching consequences for consumers and companies alike, even in Hungary.
“It would be well worthwhile for domestic companies to investigate whether they sell the affected products, as the increase in tariffs may affect their demand, which may necessitate a change in their pricing,” said Attila Fülöp, Ernst & Young’s local tariff expert.
Fülöp also emphasized the possibility of the phenomenon becoming even stronger in the second phase, noting that some taxes may be as high as half of the value of the given products.
Brussels opted for countermeasures against U.S. tariffs on steel and aluminum imports after talks to ease the restrictions failed. U.S. President Donald Trump’s initial decision in pursuing a protectionist trade policy against the EU was announced in March, with the implementation postponed until June 1, 2018.
According to Regulation 2018/724 of May 16, the EU will apply a tariff of up to 25% for a variety of U.S.-produced goods, starting from June 20. The regulation will not apply to U.S. commodities that received import permits before May 17. The second stage of measures may take place from March 2021, including further duties of as much as 50% on some U.S. goods.
The categories sanctioned in the first stage by Brussels include clothes, fruit juice, motorcycles, peanut butter, and whisky. Even Hungary alone imports a significant amount of U.S. products, with the total value of imports adding up to around HUF 730 billion in 2017.
Value-wise, about two-thirds of U.S. commodities imported to Hungary consisted of machines and electronics in 2017, according to the Central Statistical Office (KSH). The value of imported vehicles and transportation equipment added up to a further HUF 25 bln, amounting to about 4.5% of the total. The value of imported food, drinks and tobacco products stayed at barely 1%.