Less Growth in Austria Due to Trump Tariffs

According to IHS model calculations, the new Trump tariffs will 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: Trade Association Demands Protection

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 diversion 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.

The possible diversion effect, where Chinese goods are increasingly sold on the European market, also prompted the domestic trade association to take action. "While everyone is talking about new tariffs, we should finally lower those tariff exemptions (amounting to 150 euros; note) that are in our own hands to zero to protect ourselves," demands Rainer Will, managing director of the trade association, in a statement. In addition, a "zero-tolerance policy" is needed for product counterfeiting. Negative impacts on his industry are also expected by the President of the Chamber of Agriculture, Josef Moosbrugger. "Therefore, we urgently call on the EU Commission to seek talks with the US government to find joint solutions and prevent a further escalation of the situation." If this does not succeed, Europe must "protect its economy in a targeted manner."

Trump Tariffs: Auto Suppliers Concerned

The representatives of the auto suppliers in the Chamber of Commerce (WKÖ) are calling for a swift but considered response to the US tariff policy. "The USA is the most important export market after Germany," said Hansjörg Tutner from the WKÖ vehicle industry in a statement. "In view of the additional US tariffs, it will be necessary to show strength in negotiations with the US government," said Tutner. "The overarching goal should be the abolition of mutual tariffs." At the Austrian circuit board manufacturer AT&S, they currently do not see their circuit boards and IC substrates directly affected by the US tariffs. "We also see no signals that they could come into focus," the company explained in response to a request from the Reuters news agency. As a supplier, however, AT&S is indirectly affected: If a European car with the company's circuit boards were subject to a 25 percent tariff in the USA, this could reduce the demand for these cars and thus also for the circuit boards.

Wifo: Trump Tariffs Could Hit Domestic Economy Hard

The new tariff barrage from US President Donald Trump is likely to cost Austria's economic output (GDP) 0.35 percentage points this year if there are no countermeasures, said Wifo economist Harald Oberhofer to journalists in the building of the Federation of Austrian Industries (IV). Exports could fall by 1.4 percent. The US step is expected to come on April 15. A total effect can only be seen after three to five years. The calculation models of economic researchers offer uncertainties, said Oberhofer. There are also uncertainties about how exchange rates will develop due to the many individual measures against individual countries.

USA Facing Inflation High and Export Slump Due to Trump Tariffs

The USA would likely be moving towards an inflation peak. Additionally, the world's largest economy is threatened with an export slump of almost a quarter (24 percent) this year. Oberhofer explained that Trump, when considering only goods in the high trade deficits of the USA with many countries around the world that bother him, is spreading only "half the truth." This is because, in (digital) services, the United States usually has large trade balance surpluses.

When considering both together, the total trade deficit of the USA with Europe is "only" 48 billion dollars or 3 percent of the total trade volume. Trump spoke on Wednesday evening (CEST) of 1.2 trillion dollars in international world trade alone - and did not consider services in this, according to Oberhofer. Minister of Economic Affairs Wolfgang Hattmannsdorfer (ÖVP) and IV President Georg Knill called for a confident joint approach by the EU and, if necessary, also the United Kingdom after the meeting with representatives of the domestic export industry.

Trump Tariffs: Measures Against US Digital Companies?

It was stated in a statement from the Federal Chancellery that they have been "prepared for this scenario for weeks." At the same time, they are striving for a negotiated solution. Minister of Economic Affairs Wolfgang Hattmannsdorfer (ÖVP) and the President of the Federation of Austrian Industries (IV), Georg Knill, also called for a confident joint approach by the EU and, if necessary, also the United Kingdom after a meeting with representatives of the domestic export industry.

Jakob Schwarz, the industrial policy spokesperson for the Greens, is also in favor of a negotiated solution. "If such a solution cannot be achieved with the USA, the reaction must be such that it hits the American economy where the most pressure is exerted on Donald Trump's environment: with the Big Tech companies."

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 also hit the Austrian economy hard. "It is to be 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 around 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 attempts are made to sell products more intensively in Europe due to the tariffs, this could even have a deflationary effect," said the scientific director of the wiiw.

(APA/Red)

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