The US decision to introduce 25 percent import duties on European goods and the EU’s retaliation could reduce Lithuania’s economic growth by between 0.33 and 1.3 percentage points over the next four years, according to central bank chief Gediminas Šimkus.
“If we assume what would happen if the EU also took countermeasures, the impact on the Lithuanian economy would be even slightly stronger and lead to a 0.33 [...] to 1.3 percentage point smaller GDP between 2025 and 2029,” the Bank of Lithuania board chairman told reporters on Wednesday.
This economic scenario by the Bank of Lithuania is based on the assumption that the US imposes 25-percent import tariffs on Canada, Mexico and the EU and 20 percent on China, and Canada and the EU retaliate.
If only Canada were to retaliate, Lithuania’s GDP growth would drop by 0.3–1.2 percentage points between 2025 and 2029, Šimkus said.
Under the mildest scenario – the US introduces 25 percent tariffs only on Canada and Mexico, and 20 percent on China, and Canada retaliates – Lithuania’s economic growth would slow down by 0.2 percentage points over the next four years.
According to the central banker, Lithuania’s exports to the US accounted for about 5 percent of total exports in 2023–2024, but the country’s production is part of diverse supply chains for products exported to the US.
Mineral products make the bulk of Lithuania’s exports to the US, Šimkus pointed out. But since 2020, there has been an increase in higher-value exports of chemical and plastic products, telecommunications and IT services.
“What happened during the Covid-19 period has contributed to this a lot as US-owned company Thermo Fisher operates in Lithuania and it produced various vaccine reagents and exported them to the US,” Šimkus explained.
Meanwhile, the growth in exports of telecommunications and IT services can be linked to the expansion of these companies in the US market.
The US imports one fifth of goods and services from the EU, while more than 20 percent of the bloc’s exports go to America, Šimkus said.
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