US tariffs could shave up to 0.8 pp off Lithuania's GDP growth – c. bank economist

VILNIUS – The US import tariffs on most countries worldwide could slow global trade, reducing foreign demand for Lithuanian goods and hurting the country's exports, company revenues and overall economic growth, according to a Bank of Lithuania economist.

Based on the latest estimates by the central bank, weaker foreign demand and greater uncertainty could shave between 0.36 and 0.82 percentage points off Lithuania's GDP growth.

The overall impact on inflation from 2025 to 2029 could range from –0.03 to 0.14 percentage points during the same period.

"The size of the estimated impacts varies depending on the tariff scenarios modeled," Kasparas Vasiliauskas, the central bank economist, said in a press release on Tuesday. 

"In the GDP modeling case, the upper impact limit corresponds to a scenario where all countries are subject to 50 percent tariffs on aluminum and steel, 25 percent tariffs on cars and car parts, China is subject to a 30 percent tariff, and other countries are subject to 10 percent tariffs until July 8, 2025," he added. 

The United States doubled its tariffs on imported steel and aluminum from 25 to 50 percent starting last Wednesday.

In early April, US President Donald Trump imposed 10 percent tariffs on nearly all US trade partners and announced higher tariffs on dozens of countries, including the European Union and Japan, in an effort to pressure them to correct what Washington considers unfair trade practices.

The higher tariffs were suspended for 90 days, but that suspension is set to expire on July 9.

Last week, the EU trade chief said negotiations with the US "are moving rapidly in the right direction," just a month before the 50 percent US tariffs on European goods are set to take effect.