As the United States escalates its trade war by imposing tariffs on European Union products, Greek households are expected to feel the economic repercussions, particularly in sectors that rely heavily on exports to the U.S. The decision by President Donald Trump to introduce a 20% tariff on a wide range of European goods has sparked concern among Greek policymakers, business leaders, and economists about the potential impact on Greece’s economy and consumers.
Key Sectors Affected
The most significant blow from the new tariffs will be dealt to Greece’s agricultural and food sectors, with products like olive oil, table olives, dairy, particularly feta cheese, and wine being most affected. These items will become more expensive on American store shelves, making them less competitive in the U.S. market. Due to the high costs of absorbing such tariffs, it will be difficult for intermediaries in the market to mitigate these price increases, which will ultimately affect consumers both in Greece and the U.S.
In total, Greek food exports make up around 31% of the country’s export basket to the U.S., with table olives alone representing €212 million of that value. This trade disruption could cost Greek producers dearly, as they risk losing market share in one of their most important overseas markets.
The Impact on Greece’s Economy
While the direct effects on Greece’s economy are expected to be relatively limited in the short term, the ripple effects of the U.S. tariffs on the broader European Union economy will undoubtedly affect Greece. According to Greek Minister of National Economy and Finance, Kyriakos Pierrakakis, the impact on Greece will largely be felt through the potential slowdown of the European economy, particularly in the Eurozone. The European Central Bank and the Bank of Greece have already projected a reduction in the growth rate of Eurozone GDP by 0.3% to 0.4% during the first year of the tariffs’ implementation.
In an interview with Bloomberg, the Governor of the Bank of Greece, Yannis Stournaras, noted that while the direct impact on Greece would be modest due to the relatively low proportion of Greek exports to the U.S. (about 4.5% of total exports), the indirect consequences from a slower European economy could still hurt Greece’s growth prospects. Stournaras also emphasized that the tariffs could have an adverse effect on inflation and might lead to further interest rate cuts in the Eurozone.
Prime Minister Kyriakos Mitsotakis also expressed caution but acknowledged the challenges ahead. “The trade war, which is just beginning, will ultimately benefit no one. It will hurt everyone,” Mitsotakis said on Thursday. He also reassured citizens, stating, “The Greek economy, with a plan and responsibility, will be able to cope with these difficult challenges.”
Exporters’ Concerns and the Role of the EU
Greek exporters are also anxious about the future of their businesses. Alkiviadis Kalampokis, President of the Panhellenic Exporters Association, pointed out that although the exchange rate between the euro and the dollar is currently more favorable than in the past, Greek exports to the U.S. will still suffer due to the tariffs.
Kalampokis noted, “30% of Greek exports to the U.S. are agricultural products, 23% are petroleum products, and 41% are industrial goods. Particularly, Greek wine, olives, and peaches have managed to establish themselves in the U.S. market.” “Many of our products are iconic and evoke, if you will, the dream of the American consumer,” he emphasized.
He added that third-party countries, including those outside the EU, could help mitigate some of the damage by absorbing some of the supply shifts created by the tariffs. He stressed the need for the Greek government to work closely with the EU to negotiate a united response to the tariffs, as the EU will be crucial in shaping Greece’s strategy moving forward.
Long-Term Outlook for Greek Households
The direct effects on Greek households in the short term are not expected to be dramatic. According to Panagiotis Liargovas, President of the Centre of Planning and Economic Research (KEPE), the overall economic impact will likely be minor, with projections suggesting a reduction in GDP growth of less than 0.5%. However, sectors heavily reliant on exports to the U.S. such as the wine industry and other agricultural goods will face significant challenges. In the long run, these difficulties could trickle down to Greek consumers if companies raise their prices to cope with the additional costs. He pointed out however that “countries with significant exports to the U.S. will initially face a blow. Some countries may even experience a reduction in GDP, possibly even recession.”
The Need for Structural Economic Changes
In the face of these challenges, Greek officials have emphasized the importance of reassessing Greece’s economic model. “This development highlights even more the need for Greece to reconsider its productive model, aiming to strengthen the resilience and outward orientation of the Greek economy,” said Ioannis Bratakos, President of the Athens Chamber of Commerce and Industry (EBEA).
Likewise, Stavros Kafounis, President of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE), called for a collaborative effort between the government and business sectors to mitigate the economic shocks caused by the tariffs. Kafounis argued that a clear roadmap is needed to guide businesses through these turbulent times.
