© Cédric Ferry / RTL
According to Luxembourg's Chamber of Commerce, Luxembourg should prepare for every possible scenario if US decides to hit EU products with tariffs.
After US President Donald Trump imposed tariffs on Canada, Mexico, and China, fears are mounting that it is only a matter of time before the EU is next in line.
"We have over $300 billion deficit. They don't take our cars, they don't take our farm products, they take almost nothing and we take everything from them. Millions of cars, tremendous amounts of food and farm products", Trump told journalists.
The new Trump Administration has criticised the EU for treating the US "very unfairly" in trade relations. Trump has therefore threatened punitive tariffs aimed at restricting European products from entering the American market, a market of longstanding importance to Luxembourg, as observed by Carlo Thelen, director of the Chamber of Commerce: "We have a lot of relations with the [US] industry, in technology, but also in finance, going on for decades."
The US market remains the most important market outside of Europe for many Luxembourgish companies. According to the World Bank, Luxembourg's exported goods and services are worth around $16.766 billion in 2022. Exports to the US amounted to $490,912 million. This corresponds to 2.93 percent of Luxembourg's total exports.
The leading sector for Luxembourg's exports to the US in 2022 was the steel industry, with goods valued at $215 million. In second place were consumer products, totalling $162.25 million in exports, followed by intermediate goods further processed in the US at $155.5 million. Meanwhile, Luxembourg's technology and electronics sector recorded exports worth $125.82 million to the US.
For the moment it remains difficult to know which sectors will be worse-hit. Industry and the car manufacturing sector are likely candidates. However, Thelen underlined the importance of remaining calm and level-headed: "There is a lot of talk about deals at the moment. Announcements are made and then we look at how the reaction is from partners on the other side. Maybe things will get taken back as the US may have underestimated the impact tariffs would have on the US itself."
This however does not diminish the uncertainty felt by businesses and investors who need assurance and a certain level of predictability. Thelen therefore stressed the need to be prepared for all scenarios:
"It's important to protect European industry as much as possible, alongside the entire European economy, so that we can respond to these measures in the best way."
What is certain is that Trump's threats have sparked concerns in Luxembourg, according to FEDIL, the federation representing Luxembourg's industries. In terms of next steps, FEDIL is drawing up an analysis, which they will present to the government in February.
