The elephant has entered the china shop

HUNGARY - In Brief 13 Jul 2025 by Istvan Racz

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As his self-imposed 90-day deadline for trade talks had been passed, Mr. Trump sent out a number of letters in the past few days. Mme von der Leyen also received one, from which she learnt that the US government intended to impose a 30% general tariff on all of the EUs merchandise exports sold into the US. This tariff is intended to be 'separate from sectoral tariffs', which is believed to mean they will be additional to the latter. As external trade is a common policy within the EU, and the US treats the whole of the EU as a single trade partner, Hungary is bound to be subject to the same tariffs as the rest of the organisation. Honestly, it is quite difficult to tell what the growth consequences of the latest tariff-increasing measure by the US government will be. At this moment, there is still uncertainty about the exact content of the measure, and it cannot be known if the new tariffs are going to be enforced just as initially announced. Judged by past experience, Mr. Trump may easily step back, postpone the measures, make a partial turnaround prior to the planned introduction, or he may be forced to implement corrections once the tariffs are actually introduced. It is not known what counter-measures the EU will take, and how the US government might then react to those. And it would be really very difficult to tell how economic agents may react if the new tariffs are just introduced as planned in Washington DC. But even so, we estimate that Mr. Trump’s penalty tariffs, should they be introduced as currently promised. would reduce Hungary’s GDP by 0.4% by end-2026. The important assumption behind this is that Hungary would lose one-third of its merchandise exports d...