Issue link: https://maltatoday.uberflip.com/i/1533084
9 NEWS maltatoday | SUNDAY • 9 MARCH 2025 Expression of Interest For more info visit micas.art/get-involved or contact procurement@micas.art micas.art Closing at noon on Friday 14 th March 2025 Videographers MICAS/EOI/004/2025 what does this mean for Malta? maceuticals and high-end manu- facturing, as well as niche sectors like luxury goods and maritime services, could face challenges if supply chains are disrupted or if European companies struggle to maintain access to the American market. "The broader concern for Mal- ta lies in the impact such tariffs would have on the European economy," he said. "Since Malta is closely tied to EU trade, any slow- down in European growth due to reduced exports to the US would be felt across various sectors. A decline in European manufactur- ing output or a loss of competi- tiveness for EU companies could weaken economic sentiment, po- tentially leading to lower invest- ment levels and slower job crea- tion in Malta." Philip von Brockdorff, an eco- nomics professor, explained that US tariffs on EU goods would primarily affect the export pric- es of aluminium, steel, cars, and food produced by European com- panies. As these goods become more expensive, exports to the US market will reduce. However, this does not mean that European consumers will avoid the burden. "[Tariffs] could hit EU economies hard, with European consumers also having to pay higher prices for European products as companies adjust because of their losses in exports. This will inevitably affect consumers in our economy who purchase, for example, cars man- ufactured in Europe. However, it's not just car prices that could be impacted. We also rely heavily on European food products, and any US tariff on food sold to the US will raise export prices, and again, any losses in exports would lead to up- ward price adjustments in Europe," he said. Hesitation in company boardrooms Von Brockdorff added that this is happening at a time when en- ergy prices remain high, with the Trump administration contrib- uting to geopolitical uncertain- ty and tensions between Europe and Russia escalating. All of these factors could cause hesitation in company boardrooms when de- ciding whether to invest. Fabri agreed that tariffs of this scale could lead to broader eco- nomic uncertainty, making busi- nesses more cautious about ex- pansion and spending. "Foreign investment, which is an essential driver of Malta's economy, could also be affected if companies per- ceive heightened risks in doing business within the EU." Another cornerstone of the Mal- tese economy could also be im- pacted: tourism. Fabri explained that an EU-US trade war could weaken consumer confidence and disposable income levels across Europe, which could lead to a de- cline in tourism spending. "Given Malta's reliance on European vis- itors, any slowdown in European economic activity could affect the hospitality sector, retail, and relat- ed industries." So far, a US tariff on EU goods is a hypothetical situation, although extremely possible. This does not mean that Malta is off the hook. The US tariffs being imposed on Mexico, China, and Canada will still have an effect on global trade, leaving Malta exposed. Fabri explained that Malta, being a small and open economy relying on trade and global supply chains, is highly sensitive to shifts in in- ternational trade policy, and one of the more immediate effects of these tariffs will come through supply chain disruptions. "Many Maltese businesses, par- ticularly those involved in man- ufacturing, pharmaceuticals, and high-value exports, rely on com- ponents and raw materials from global suppliers, including China. Any increase in costs due to tariffs on these imports can translate in- to higher production expenses for local firms, reducing competitive- ness," he said. There is no doubt that tariffs will drive up costs for businesses in Europe and beyond. Fabri pointed out that, as a result of increased costs, consumers and companies in Malta could expect to see high- er prices for imported goods, par- ticularly those that originate from China or contain Chinese compo- nents. "This inflationary pressure could affect purchasing power and business costs alike," he said. Global uncertainty Von Brockdorff pointed out that, beyond the direct or indirect effects of US tariffs on Mexican, Canadian, and Chinese goods, these measures create economic uncertainty globally, which could have an effect on the eurozone economy. Chinese firms might seek alternative markets, includ- ing the European market, to sell their products by lowering export prices and competing aggressively with European producers. "Other than creating econom- ic uncertainty leading to more sluggish economic growth in the Eurozone, I can't see any direct impacts on our economy," he said. Fabri added that global econom- ic uncertainty leads to financial market volatility. "Given that Mal- ta has a strong financial services sector and is closely integrated with European and international markets, fluctuations in investor confidence can have ripple effects on investment flows and econom- ic growth." "Additionally, as part of the EU, Malta's economy is deeply tied to the broader EU market. If tar- iffs dampen European economic activity by reducing exports to key trading partners, the slow- down could indirectly affect Malta through lower demand for goods and services, investment shifts, and reduced tourism flows," Fabri said. Philip Von Brockdorff (left) and JP Fabri