Romania's temporary president pinpoints essential sectors impacted by U.S tariffs, advocates for measured reaction
In an April 8 press briefing, acting president Ilie Bolojan pointed out potential economic turbulence for Romania due to international trade disputes, especially affecting sectors like aluminum, pharmaceuticals, and component manufacturing. The issues arise amidst the ripple effects of decreased German exports to the U.S., and Romania's involvement in European value chains might amplify vulnerabilities.
Bolojan urged moderation and continued dialogue between the EU and the U.S., fearing that repercussive tariffs could boost inflation and recession risks. He also championed reinforcing Romania's industrial foundation and competitiveness in the face of external shocks.
Key points from Bolojan's statements:
- Economic difficulties in a country such as Romania, with large deficits, can bring about severe consequences.
- Collaboration at both the European and national levels is crucial for a more robust economy.
- By employing industrial policies, Romania should stimulate domestic production and integrate Romanian firms more significantly into global value chains.
- Romania will experience problems in the aluminum sector, the pharmaceutical industry, and the component manufacturing area that includes steel and aluminum.
- The situation will create a significant indirect impact since Germany's economy comprises a third of the EU's exports to the United States. Consequently, Romanian companies integrated into these value chains might see reduced orders, potentially leading to slower activity.
- Foreign investments, already scant in Romania, will probably decrease until stability is reached.
- Romania believes that the retaliatory actions the EU might implement in the near future could escalate the costs of confrontation, and the implications could be more substantial for our economy due to accumulating tariffs causing inflation, reduced consumer power, and the likelihood of a recession.
- On April 9, the EU Trade Barriers Committee will approve a preliminary response to the U.S. tariff measures. The initial set of tariffs will be a countermeasure to the U.S. administration's steps, primarily targeting agricultural goods imported from the U.S., with tariffs ranging from 10% to 25%.
- Romania is additionally concerned about ensuring that imports related to the nuclear sector within the European Union are not included in this sanctions package since it has a major contract for the nuclear reactors at Cernavoda 3 and 4. In this case, any retaliatory action would incur additional expenses.
- Romania intends to advocate for the continuation of negotiations so that the two significant markets, the EU and the U.S., can find solutions that enable economic collaboration to persist.
The underlying concerns revolve around the significant economic risks posed by the transatlantic trade disputes to the aluminum, pharmaceuticals, and component manufacturing sectors in Romania. These industries face direct exposure due to the country's integration into European supply chains and reliance on exports. Tariffs could inflate production costs, heighten inflationary pressures, and potentially lead to recession. To enhance resilience, Romania is focused on negotiation, bolstering its industrial base, and increasing integration into higher-value global value chains.
[1] Romania Insider[3] Reuters[4] European Commission - DG Trade[5] European Central Bank
(Photo credit: Presidency.ro)
- Romania's acting president, Ilie Bolojan, expressed concern about severe consequences that economic difficulties in a country with large deficits, such as Romania, could bring.
- Bolojan emphasized the importance of collaboration at both the European and national levels for a more robust economy, suggesting that industrial policies should be employed to stimulate domestic production and integrate Romanian firms more significantly into global value chains.
- According to the acting president, Romania will experience problems in the aluminum sector, the pharmaceutical industry, and the component manufacturing area that includes steel and aluminum due to the ripple effects of decreased German exports to the U.S. and Romania's involvement in European value chains.
- Foreign investments in Romania, already scant, will probably decrease until stability is reached, as the country braces for retaliatory actions from the EU, which could escalate the costs of confrontation and have substantial implications for Romania's economy.
- To enhance resilience, Romania is focused on negotiation, bolstering its industrial base, and increasing integration into higher-value global value chains, as the underlying concerns revolve around significant economic risks posed by transatlantic trade disputes to the aluminum, pharmaceuticals, and component manufacturing sectors in Romania.
