VALLETTA, March 10 (Xinhua) -- The tariffs the U.S. government plans to impose on European Union (EU) goods are likely to drive up costs for businesses and consumers across Europe, Maltese economist JP Fabri said in an interview with Xinhua on Monday.
Fabri noted that these additional costs would ultimately be passed on to consumers. Given Malta's small size, the country would experience both direct and indirect consequences, he added.
On Feb. 26, U.S. President Donald Trump announced that his administration would impose a 25-percent tariff on EU products, including automobiles.
"As a small, open economy that depends heavily on trade and global supply chains, Malta is highly sensitive to shifts in international trade policy," Fabri said, "One of the most immediate effects comes through supply chain disruptions."
Many Maltese businesses, particularly those involved in manufacturing, pharmaceuticals, and high-value exports, rely on components and raw materials from global suppliers, he explained. "Any increase in costs due to tariffs on these imports can translate into higher production expenses for local firms, reducing competitiveness."
As tariffs drive up costs for businesses in Europe and beyond, consumers and companies in Malta may see higher prices for imported goods, Fabri said, adding that this inflationary pressure could affect purchasing power and business costs.
Fabri also highlighted the global economic uncertainty and financial market volatility triggered by tariffs.
Tariffs of this scale could "create broader economic uncertainty, making businesses more cautious about expansion and spending," he warned, adding that foreign investment, which is an essential driver of Malta's economy, could also be affected if companies perceive heightened risks in doing business within the EU.
Malta's strong financial services sector, closely integrated with European and international markets, could experience ripple effects from fluctuation in investor confidence, impacting investment flows and economic growth, he added.
If tariffs weaken European economic activity by reducing exports to key trading partners, the slowdown could indirectly affect Malta via lower demand for goods and services, investment shifts, and reduced tourism flows, he said.
"While Malta may not be at the center of the trade war, the consequences of a 25 percent tariff on EU goods would still be felt due to its economic interdependence with Europe and the broader global trade environment," Fabri said.
