Washington, April 24, 2025 (Lusa) - Portugal's miniser of finance, Joaquim Miranda Sarmento, warned on Thursday that tariffs "harm economic growth" and particularly affect people with lower incomes in the countries that impose these measures, but admitted confidence that a "balanced agreement" between the US and the European Union could be reached.

Speaking to Lusa in Washington on the sidelines of the International Monetary Fund and World Bank spring meetings, the minister said that it was "impossible" to anticipate the outcome of the negotiations between the US and the EU, although he emphasised that "tariffs harm economic growth and economic efficiency, and particularly harm consumers and those on lower incomes in the countries that impose the tariffs.

"That's what the 2016/2017 experience [shows us], when the US raised tariffs," he went on. "Naturally, uncertainty and a more adverse international context make the economic and budgetary exercise more demanding, but in any case, we are confident that, on the one hand, Europe and the US will be able to reach a balanced agreement that does not harm either economy, and, on the other, that the government will maintain this path of budgetary balance and public debt reduction."

The current moment is one of heightened trade tensions following US President Donald Trump's announcements of 25% tariffs on steel, aluminium and cars and 20% reciprocal tariffs on the EU, although the latter have since been suspended for 90 days. 

Asked by Lusa about the impact of these tariffs on Portugal's economic growth forecasts, Miranda Sarmento said that the scenario is still being analysed, but reiterated that he was "relatively confident that Europe and the US will be able to reach an understanding that is beneficial to both economies.

"We are still analysing [the situation]; there are many factors here," he said. "It also depends on how the EU responds and the impact they have on economies that are more exposed to the American market, such as Germany or France, which then have indirect effects on the Portuguese economy. We'll see what happens in the coming months and what the final outcome of these negotiations will be." 

On Wednesday, US Treasury Secretary Scott Bessent warned the IMF and World Bank that they are deviating from their original mission and that US funding will not be unconditional. 

"The Trump administration is willing to work with them as long as they stick to their missions," Bessent said of the two institutions, arguing that "they are falling short." 

According to Bessent, these institutions "need to move away from their scattered and unfocused agendas, which have hampered their ability to fulfil their core mandates." 

With regard to the IMF, Bessent argued that the organisation "spends a disproportionate amount of time and resources on social, climate change and gender issues." 

In light of the treasury secretary's warnings, Portugal's finance minister said it was important that the US continued to play a "vital role" in multilateralism and that there could be a "fruitful dialogue between the US and the EU" aligned with "international decisions that promote, on the one hand, more open trade, but also regulated trade," and on the other, the "development of areas of the world that are currently less developed." 

However, the minister emphasised that there was "an opportunity for Europe" to increasingly assert itself in a leading role in terms of international development and support, cooperation and international trade with other regions of the world. 

"Europe must increasingly assert itself as a place of multilateralisation in relations with other economic blocs," he concluded. 

MYMM/ARO // ARO.

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