Direct impact of US tariffs on Ukrainian exports will be minimal – NBU

The National Bank of Ukraine (NBU) expects that the direct impact of the new US import tariffs on Ukrainian exports will be minimal. This is due to the fact that exports from Ukraine to the United States in 2024 amounted to only 2.2% ($0.9 billion) of total merchandise exports. Due to the surplus of trade in goods with Ukraine, the United States imposed the lowest duty of 10% on our country.

These expectations are set out in the NBU’s inflation report with an updated macroeconomic forecast for 2025-2027.

The NBU’s estimates of the moderate impact of tariff wars on Ukraine are also based on the structural features of the domestic economy, including a significant share of agricultural exports and high dependence on energy imports.

The bulk of Ukraine’s exports are made up of cast iron, accounting for 42% of exports to the United States. The NBU estimates that exports of steel products will not undergo critical changes due to the relatively high share of pig iron imports in US consumption (about 20% in 2023). In addition, previous experience shows that even in the presence of anti-dumping duties imposed by the US, exports of pipe products (13% of total exports to the US) will continue.

The situation with exports of certain types of food products to the United States (15.8% of exports), including oil, honey and juices, is also quite acceptable.

“Given the low price elasticity of food products, the popularity of these products in other markets, and new opportunities for exporters as a result of the closure of markets for American products, we expect a successful reorientation to other markets and minimal losses for exporters,” the NBU said.

The indirect impact of tariff wars on the Ukrainian economy will be stronger. The obvious consequence of trade confrontations will be a slowdown in economic activity in some of Ukraine’s main trading partners, primarily in the Eurozone and Central and Eastern Europe, which is likely to lead to a narrowing of external demand for Ukrainian products.

“This was one of the reasons for the downgrade of Ukraine’s GDP growth forecast to 3.1% in 2025. At the same time, given the experience of countries in restructuring global value chains gained during previous trade confrontations and the coronavirus crisis, as well as the fiscal stimulus introduced, the NBU expects that the slowdown in the countries – major trading partners will be short-lived and will not have a long-term negative impact on the growth rate of Ukraine’s real GDP,” the NBU inflation report states.

At the same time, geopolitical uncertainty is growing, and the processes of de-globalization are intensifying, in particular due to the rapid escalation of trade confrontations in the world.

“If these processes are prolonged, tend to grow further, and are accompanied by rapid political polarization of countries, the external environment may be less favorable than envisaged by the current macroeconomic forecast. This could lead to a more significant and longer-than-expected weakening of the global economy and external demand,” the NBU analysts emphasize.

The progress of the US tariff war with other countries can be found here.

On March 12, US tariffs on all imported steel and aluminum in the amount of 25% came into effect. Canada, Mexico, Brazil, South Korea and Japan are the largest steel exporters to the country, while exports from Taiwan and Vietnam are growing rapidly.

As GMK Center reported earlier, the increase in trade barriers and political uncertainty in the world will have global consequences. This could lead to a slowdown in the global economy and a recession in the US economy, a redirection and/or reduction in global trade flows, and a global increase in inflation.