The imposition of tariffs of up to 25% on car imports from 2 April, announced by US President Donald Trump, has sent shockwaves through European markets. How much will Cyprus be affected?
At a critical time for the global economy, President Trump’s announcement to introduce tariffs of up to 25% on imported cars starting 2 April escalates trade tensions with Europe and Asia. This decision comes as major European economies like Germany and France teeter on the brink of recession, with their car industries already facing serious challenges.
In response to this announcement, economist and analyst Yiangos Hadjiyiannis spoke on the programme “Mesimeri kai Kati” on SIGMA, analysing the potential consequences for both Europe and Cyprus.
Shockwaves in the European car industry
As Mr Hadjiyiannis pointed out, the German and French car industries are already under pressure, and the new US tariffs complicate matters further, increasing the risk of a Eurozone recession.
“There are major issues facing Germany’s and France’s car manufacturers, both in terms of the transition to electric vehicles and rising labour costs, which are reducing expected profits. So, at a difficult time, this new development from the US complicates things further and could push the Eurozone into recession,” he said.
What does this mean for Cyprus?
According to the economist, no significant immediate changes in car prices are expected in Cyprus. However, much depends on the European Union’s response and how car manufacturers react. If the EU chooses to retaliate with countermeasures, the trade dispute could escalate, causing broader market disruptions.
Mr Hadjiyiannis stressed that, as a Eurozone country, any shifts in EU conditions can impact Cyprus. “We are dependent; we live within a Eurozone environment where any disruption or change in circumstances can certainly affect Cyprus, because we are part of a broader economy.”
Risk of car shortages?
One question raised was whether the new tariffs could lead to car shortages. Mr Hadjiyiannis explained that the situation is complex, as many US car manufacturers import components from Europe.
Trump’s statement that manufacturers should build factories in the US to avoid tariffs is easier said than done, he noted. Major Asian car manufacturers, such as those in Japan and South Korea, are also expected to come under significant pressure, as the US is a key export market for them.
What will Europe’s response be?
All eyes are now on the decisions to be taken by the EU. If Europe opts to escalate the situation with countermeasures, the trade dispute could affect the entire Eurozone economy—and by extension, Cyprus. The only certainty is that these developments are creating an uncertain environment for the car market, both in Europe and in Cyprus.
Also read: Cyprus FinMin calls for serious dialogue on US tariffs
Photo source: Newsweek
Source: Economy Today
