Romania bracing for economic downturn as tariffs hit exports to USA

Romania is facing economic challenges due to the imposition of 15% customs duties on European exports to the USA, impacting its export sector. Exports from Romania to the USA constitute less than 3% of the country's total exports, revealing a limited direct influence from these tariffs. Iulian Lolea, a macroeconomist at the Concordia Employers’ Confederation, emphasized that the indirect impacts are more significant as key EU countries like Germany and France, which are major trade partners for Romania, will reduce their economic activity due to these tariffs, consequently affecting their import volumes from Romania. The sectors that will face direct repercussions include those producing electrical components, auto parts, steel, and furniture, which collectively represent over 60% of Romania's exports to the USA. Lolea noted that while the new agreement is less severe than previous measures introduced during President Trump’s administration, this relief is tempered by the broader context of increasing uncompetitiveness for European goods in the American market. The dual impact of tariffs and the euro's appreciation against the dollar, which has risen by over 10% this year, results in pricing pressures that will hinder EU economies, including Romania. Economic forecasts indicate a potential decrease in growth rates for the euro area by 0.3% to 0.4%, translating into a decrease in Romania's expected economic growth of 0.15% to 0.2%. While some optimism exists regarding the mitigation of the negative effects on auto industry-related exports from Romania, the overall sentiment remains cautious. Future economic assessments may reveal further distortions in trade flows, creating challenges for European exporters in light of the tariff structure. In conclusion, the situation illustrates the complex interdependencies within European and American markets, with tariffs acting as a significant variable affecting trade dynamics. Stakeholders within Romania must remain vigilant as they navigate these emerging economic realities that are increasingly influenced by international trade policies and currency fluctuations.