As Minister of Economy and Innovation Lukas Savickas said earlier on Thursday, 3 April, it is estimated that if the duties remain at the announced level, they would reduce Lithuania's Gross Domestic Product (GDP) by up to 0.65 percentage points over a 3–4 year period, and have an even more significant impact if they are maintained in the longer term.
„This is an unprecedented case, and it is probably important to forecast these figures, but more important is the fact itself, which tells us that there will be a direct or indirect hit on our industry, which is largely dependent on exports to the US through supply chains. (...) The impact will be serious whether it is 0.65 or 1%,“ Romanovskis said.
With the ruling party planning to adopt a tax reform in the spring, which would include a one per cent increase in corporate tax, Romanovsky urged politicians not to take drastic steps amid uncertainty about the impact of retaliatory EU tariffs.
Susiję straipsniai
„Our economy will be hit by two blows – an external, strong blow and an internal, strong blow. That negative effect (on the economy – ELTA) could be much bigger than those figures. (...) All the things that threaten at least some economic growth have to be put on the handbrake“, he explained.
„We don't know how this global tariff war will escalate, how it will affect supply chains,“ the LVK President added.
According to the business representative, the US is embarking on a global economic war that will affect everyone, either directly or indirectly. The only question is how each country will be able to absorb the economic damage caused by the tariffs.
„When there was the disconnection from Russia, there was probably an even bigger impact. However, the impact will be serious because this is the most serious tariff war in a century. (...) When you have an almost global economic war, a customs war, at this level, you cannot be untouched by such a war – it's just a question of how much you can adapt“, Romanovsky said.
The Head of the LVK gave the example that after the opening of the Taiwanese representative office in Lithuania, when China started to apply targeted economic pressure, the country's businesses diversified their markets, often proactively targeting the USA, and this move by the latter will strike a „big blow“.
„Here was a targeted shot at us, one, and here is an all-out war“, he stressed.
„Considering that Lithuania is not a player that could somehow have a major impact (on the world economy – ELTA), so we are in a way pawns in this war, then we have to try to protect our interest and minimise other factors that could somehow affect our economic growth,“ Romanovsky noted, referring to the proposal to stop the tax changes.
Welcomes the EIM support package: Businesses cannot face such crises alone
To help Lithuanian companies importing products to the US, the Ministry of Economy and Innovation (EIM) has announced a EUR 20 million support package for an estimated 1,041 Lithuanian companies.
Romanovskis said that although it is unclear whether this financial support will be enough in the long term, businesses appreciate politicians' quick reactions to the rapidly changing situation.
„It is important for any measures to appear, and I welcome the 20 million – if a measure is designed to help, it can then be accelerated if it finds a response. For example, the same situation with China – measures were prepared, but they were not so popular because businesses adapted“, emphasised the Head of the LVK.
„The market does not dictate this war; it is dictated by political motivation. That is why the state must step in. In a sense, I can draw a parallel with a pandemic – these are crises at a level that business alone cannot cope with, hence the EU's institutional response,“ he said.
This support is aimed at diversifying the exports of Lithuanian companies and opening up new markets.
The measure is expected to be launched as an urgent call for funds to cover part of the salaries of additional export managers and companies' participation in exhibitions and business missions. It could be worth up to EUR 12 million.
Up to EUR 1 million is foreseen for associate business structures and business missions abroad.
According to the EIM, Lithuania's direct exports to the US account for about 6.8% of total exports of Lithuanian goods. Last year, exports amounted to EUR 1.6 billion, making the US the fifth most important export market.
On Wednesday, US President Donald Trump announced tariffs of 34% on imports from China and 20% on imports from the European Union, the US' two main trading partners.
According to the President, an initial tariff of 10% will be imposed on imports from many other countries. Still, some will be subject to much stricter tariffs, including 24% in Japan and 26% in India.
The 25% tariffs on non-US-made cars announced by Mr Trump last week also came into force on 3 April.