Tariffs will force Portuguese companies to seek alternative markets or make layoffs

The US administration’s round of sweeping tariffs will oblige Portuguese export companies to seek other international markets and those who fail to do so may have to lay off staff.

That is the stark warning from Pedro Braz Teixeira, director of Portugal’s Forum for Competitiveness’s Studies Office.

Portugal will not be immune to the 20% reciprocal tariffs announced on Wednesday with several exporting sectors of the Portuguese economy having the US as their main trading partner, with economists warning that either these companies find new markets quickly, or they will have to start making layoffs.

“It is very likely that there will be falloffs in trade and that the exporting companies will sell less. In this scenario, they will be forced to look for alternative markets. And ultimately, if they can’t, they may have to lay off people,” warns Pedro Braz Teixeira.

And it is difficult to underestimate the impact of the US market on the Portuguese economy. According to data from the National Institute of Statistics (INE), the US has become the fourth largest market for national exports. In 2024, this commercial relationship represented 8% of all Portuguese goods and services exported, to the combined import-export amount of €9.9Bn.

According to the Bank of Portugal, about 12% of Portugal’s exporting companies “manufacturing textiles and non-metallic mineral products (which includes glass, ceramic products and cement)” are strongly exposed to the US market, selling more than 10% of their production.

The beverage, computer equipment, communications, electronics and optics industries also have “a significant percentage of companies” with high exposure to the American market.

“There are sectors such as medicines, cork, furniture, tyres, wine, textiles, footwear and paper, which are particularly exposed to sales to the US. And the losses that may occur in these sectors will mean that people have less purchasing power and, then, all other companies in general sell less because consumers will have less income,” explains Pedro Braz Teixeira.

Before the actual tariffs were announced, the Bank of Portugal published a study where it estimated the impact of a 25% reciprocal tariffs on Portugal’s economy at 1.1% of GDP at the end of three years.