Trump’s Tariffs Harm Ukraine Less Than Losses from European Trade Preferences

The impact of the tariffs imposed by U.S. President Donald Trump on the Ukrainian economy in the short term is less significant than the consequences of the suspension of trade preferences from the European Union, which occurred after the onset of Russia’s large-scale aggression. This is stated in the Inflation Report for April 2025, published by the National Bank of Ukraine.

This is reported by AgroReview

The National Bank reminded that the U.S. applied the lowest tariff rate to Ukraine — 10%. According to analysts, “the direct impact of the new tariffs on the Ukrainian economy is expected to be minimal, as the volumes of exports to the U.S. are small. Moreover, Ukrainian exporters have the opportunity to redirect their supplies to other markets, and some of them may even gain a competitive advantage in the American market amid higher barriers for other countries.”

Volumes of Ukrainian Exports to the U.S. and Their Impact

In 2024, the share of Ukrainian exports to the U.S. was only 2.2% of the total volume — about $0.9 billion. This amount primarily includes pig iron (42%), pipes (13%), and Ukrainian food products (15.8%), among which oil, honey, and juices prevail. According to estimates from the NBU, exports of metallurgical products, particularly pig iron, will remain stable due to the high level of imports of this raw material in the U.S. — about 20% in 2023, which reduces the risks of critical changes.

However, more significant negative impacts will come from indirect factors, including a slowdown in economic activity in European and Central Eastern regions, which may lead to a decrease in demand for Ukrainian goods. This has been one of the reasons for the deterioration of the growth forecast for Ukraine’s gross domestic product to 3.1% in 2025, emphasized the NBU.

At the same time, it is expected that the agreement on a duty-free trade regime with the EU will remain in effect under similar or close to previous conditions. However, in the event of its cancellation, Ukrainian exports could suffer significant losses — up to $1 billion annually. Meanwhile, experts point to the possibility of actively increasing supplies to African and Asian countries and exploring new markets to mitigate risks.

Ukraine and the EU are currently working on updating trade conditions, which should replace the existing autonomous preferences. Preliminary data suggests that the new system of tariff quotas may be more favorable than a return to the conditions of the free trade agreement, which would reduce potential negative consequences for exports.

It should be noted that the European Union does not plan to extend the preferences established after the start of Russia’s war against Ukraine, which are valid until June 5, 2025. After this date, a return to the trade conditions that existed before the war is possible. At the same time, the possibility of making changes to the conditions of the DCFTA agreement is being considered, including increasing quotas for certain types of Ukrainian agricultural products.