How new US tariffs could affect Luxembourg's economy

In response to a parliamentary enquiry by MP Sven Clement, the Luxembourg Ministers of Economy, Foreign Affairs and Finance reported that 460 Luxembourg companies exported to the US in 2024. Of these, 41 companies supplied goods classified as transport materials. At the same time, not only supplies from this category, but also informally related products for the automotive industry could be hit by potential US tariffs.

The assessment of the possible impact showed that the 0.98% figure mentioned in the article does not reflect the real fall in Luxembourg's GDP, but rather describes the extent of the country's involvement through exports, including indirect supply chains through other EU countries. The real effect on GDP will be lower.

The ministers emphasise, however, that it is extremely difficult to accurately assess the impact due to many factors. These include possible substitution of goods by consumers and producers, changes in trade flows, possible responses from the EU and other countries, and currency instability. For example, the US is discussing a possible devaluation of the dollar, which in turn could affect inflation and trade relations with Europe.

STATEC is working on assessing the impact of the new tariffs, but there are no final conclusions yet. Historically, such high duties have been rare, and standard econometric models do not do a good job of analysing them.

The Luxembourg economy, in which financial services play a key role, could also be indirectly affected by instability in the financial markets.

The country's government supports the EU's collective approach and continued dialogue with the US to avoid escalation of the trade conflict. If negotiations fail, Luxembourg is ready to support a proportionate EU response to the US measures.