Less Growth in Austria Due to Trump Tariffs

The new Trump tariffs will, according to IHS model calculations, reduce the domestic GDP by 0.4 percent. A decline in economic performance could also increase the budget deficit. In addition to the US tariffs, the cooling of the global economy is also affecting Austria, according to Klaus Weyerstrass from the Institute for Advanced Studies (IHS). The International Monetary Fund predicted global growth of 3.3 percent for 2025 in January. Weyerstrass expects growth to be 0.2 to 0.3 percentage points lower this year due to the US tariffs and a 0.5 percentage point reduction in global growth in 2026.

Possible Flood of Goods from Asia Due to Trump Tariffs

In Europe, the IHS foreign trade economist expects "hardly" any effect on the inflation rate. However, there will be another negative economic impact for Europe due to the redirection of trade flows by US tariff policy, such as an additional flood of goods from Asia. For the USA, Weyerstrass expects a higher inflation rate and lower economic growth due to less consumption and uncertain consumers. The tariff package announced by US President Trump would raise the average US tariff rate to the highest level since the 1940s, the IHS foreign trade economist referred to data from the US Tax Foundation.

Wifo Chief: Trump Tariffs Mean "Nothing Good"

The US import tariffs announced yesterday, Wednesday, mean "nothing good" for employees in the European automotive industry, said the head of the Economic Research Institute Wifo, Gabriel Felbermayr, in the Ö1 "Midday Journal". Unlike in the USA, the impending trade war in Europe is likely to be felt primarily in the labor market and could also lead to price declines in the short term. If the EU introduces counter-tariffs, prices could also rise here. If US demand for European products decreases due to the tariffs, the goods would remain more in Europe and could cause short-term price reductions there. Above all, however, the tariffs are "another blow" against the industry.

Trump Tariffs: Measures Against US Digital Companies Demanded

For possible countermeasures by the Europeans, US digital companies would be suitable. Here, one could "hit the Americans where it hurts," according to Felbermayr. Specifically, the Wifo chief mentioned an EU-wide sales tax on digital advertising revenues. However, unlike tariffs, tax issues in the EU require unanimity among the 27 member states. Additionally, this would also affect European consumers if, for example, streaming subscriptions become more expensive. Europe should not panic and take quick countermeasures but proceed thoughtfully. For any negotiations with the US government, one must also consider what could be offered to the Americans in return.

Trump Tariffs: wiiw Expects Deepening of the Recession

From the perspective of the Vienna Institute for International Economic Studies (wiiw), the tightening of US tariff policy will hit the Austrian economy hard. "It is expected that the recession will deepen," said wiiw trade economist Robert Stehrer in an interview with APA. With tariffs of 20 percent, EU exports to the USA would decrease, which would also affect Austrian exporters. "This is another blow to the economy amidst negative growth."

Currently, according to Stehrer, EU exports to the USA account for about 7 percent of total European exports. For Austrian producers, the question arises whether they can find other markets for their products. However, the US measures are unlikely to have a negative impact on inflation in the European Union. "If, due to the tariffs, there is an attempt to sell products more intensively in Europe, this could even have a deflationary effect," said the scientific director of the wiiw.

(APA/Red)

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