50 Percent USA Tariffs on EU Imports Would Reduce Austria's GDP by 0.68 percent. That is Slightly Higher Than the EU Average of 0.66 Percent

Hendrik Mahlkow

26.05.2025

50 Percent USA Tariffs on EU Imports Would Reduce Austria's GDP by 0.68 percent

That is Slightly Higher Than the EU Average of 0.66 Percent

On 23 May 2025, President of the USA Donald Trump announced that, starting 1 June 2025, the USA would impose punitive tariffs of 50 percent on all imports from the EU. This measure marks an escalation in the transatlantic trade conflict following stalled negotiations between the USA and the EU. Meanwhile, Donald Trump has announced that he will suspend the planned tariffs until 9 July 2025.

The Austrian Institute of Economic Research (WIFO) has used its KITE trade model to simulate the potential impact of these announced tariffs on the Austrian economy. The results suggest that Austrian exports to the USA could decline by around 29 percent. Despite an expected slight drop in the price level of 2.9 percent – which would ease pressure on consumers – overall economic output is projected to decrease by 0.68 percent, slightly above the EU value of 0.66 percent.

"The escalation of the trade conflict between the USA and the EU comes at a bad time", says Hendrik Mahlkow, trade expert at WIFO. "It slows down Austria's export-driven economy and adds to global uncertainty", Mahlkow continues. WIFO recommends considering short-term support measures for particularly affected firms – if no agreement between the USA and the EU is reached – and focusing on long-term diversification of export markets. A robust European trade policy is more crucial than ever in this environment.