How will EU-US trade war fallout impact Malta?

The biggest risk of an EU-US trade war for Malta is the broader effects it could have on other EU economies, the Chamber of Commerce said.

Rather than direct trade with the US, Malta’s greatest exposure is through the potential impact of tariffs on its European trade partners, according to Rachel Bondi Attard, a spokesperson for the Chamber.

The European Union has unveiled tariffs countering US moves on steel and aluminium, hitting some $28 billion worth of US goods in stages from April.

Trump, who took over the US reins in January, termed the EU “one of the most hostile and abusive taxing and tariffing authorities in the world” and accused it of being “formed for the sole purpose of taking advantage of the United States”.

The US president threatened to impose 200 per cent tariffs on wine, champagne and other alcoholic products from France and other European Union countries.

Malta-US trade relatively small but still significant

Bondi Attard said direct trade between Malta and the US is relatively small compared to Malta’s GDP. However, it is still significant.

Exports from Malta to the US total around €200 million a year. Much of that comes from pharmaceuticals and medical product manufacturing, machinery and electronics, including precision instruments, as well as tech-related goods and software.

Imports also add up to around €200 million a year, the Chamber said. Medical devices, vehicles, electronics, aerospace components, industrial machinery and luxury goods make up most of what comes to Malta from the US.

Trade in services with the US amounts to between €250 and €400 million a year. These services include financial services, iGaming and tech services, professional services and shipping.

“If the EU and US impose mutual tariffs or trade barriers, Malta could face higher costs on imported US-origin goods and materials, along with potential supply chain disruptions. Similarly, Maltese companies exporting goods or services to the US could also be affected by tariffs,” Bondi Attard said.

An escalating US-EU trade dispute could dampen transatlantic investment flows, leading to increased caution among US investors when considering investments in EU-based entities, including those in Malta.

Even though Malta does not engage in large-scale direct manufacturing trade with the US, companies within important Maltese industries either export to the US directly or rely on US-sourced raw materials, the Chamber spokesperson said.

“These tariffs will likely create a lose-lose situation, where increased costs on both sides could reduce demand and put pressure on businesses. This, in turn, may push Malta to strengthen trade ties with other global partners, accelerating a shift in the world economy.”

The US president threatened to impose 200 per cent tariffs on wine, champagne and other alcoholic products from France and other European Union countries. Photo: AFP

US trade is counted in millions, EU trade in billions

While Malta-US trade is counted in hundreds of millions, trade between Malta and the EU reaches well into billions of euros.

Malta imports around €7 billion a year and exports €3 billion. Service exports in sectors like tourism, finance, gaming, and shipping account for another €3 billion, Bondi Attard said.

That means a US-EU trade war puts Malta at risk because of the economic fallout that could happen in Europe.

“Malta is highly sensitive to economic shifts within the EU. If a trade conflict slows down economic growth in key European markets – such as Germany, France or Italy, which are Malta’s primary trade partners – it could have a significant indirect impact on Maltese exports and services,” the Chamber spokesperson said.

“The situation remains fluid and much depends on what measures are ultimately implemented.”