Moody’s Analytics’s Ganguly: Trump’s tariffs will not affect Bulgaria’s entry into euro zone
The tariffs imposed by US President Donald Trump should not themselves affect the process of Bulgaria entering the euro zone, Gaurav Ganguly, Senior Director of Economic Research at Moody’s Analytics, told Nova Televizia in an interview on April 6.
Tariffs apply to the entire European Union, not just the euro zone, so it is not as if Bulgaria will face new punitive tariffs with its entry into the euro zone, he said.
He said that the United States is not a major trading partner of Bulgaria, and Bulgaria is also by no means a major export destination for the United States.
Bulgaria has linked its currency to the euro from the very beginning, Ganguly said, referring to the currency board arrangement in 1997 that linked the lev first to the Deutsche Mark and from 2002, to the euro.
“So in any case, you lack the tools for independent monetary policy. Now is not the time to withdraw from the agreements that have long existed in order to enter into deeper integration with Europe and, by engaging with the euro zone, become part of the monetary union,” Ganguly said.
“In my opinion, this is a process that should continue, regardless of what happens on the international stage with tariffs,” he said.
Commenting on the effect of the trade war on EU countries, he said that there are some exceptions to what Trump announced on April 2 – the pharmaceutical sector will be exempt from additional fees.
In 2024, the EU exported goods worth approximately 530 billion euro to the US, 20 per cent of which are pharmaceutical products. A fairly large part of the goods will be exempt from tariffs. But the remaining two per cent of EU GDP is at risk, Ganguly said.
The EU economy as a whole will take a hit, he said.
“And according to our estimates, we will see approximately 0.3 per cent reduction in EU GDP this year, perhaps up to one per cent reduction next year.
“And this is assuming that not all tariffs are maintained. So we are facing the prospect of the EU teetering on the edge of recession in the next 18 months or so if these tariffs are not lifted immediately, if some kind of agreement is not reached,” he said.
Regarding tariffs on energy imports, and specifically on natural gas, he said: “If the EU retaliates, then it creates the same problems for businesses and consumers within the community that the US is facing from US tariffs. Consumers will pay higher prices. And companies will feel lower margins. And business in the EU will suffer.”
Of course, there is a difference in scale, he said.
The US has launched a trade war against every single one of its trading partners. The EU, as a countermeasure, will review its relations with only one trading partner. And this limits the extent to which it causes damage to the EU.
It is possible that consumers and businesses will be able to replace at least some US products, he said.
But there is no doubt that an “eye for an eye, a tooth for a tooth” trade war is not beneficial to anyone, Ganguly said.
“And it is highly advisable that the world does not go down this path, does not enter into such a trade war. But this depends on whether the US decides to remove its tariffs.”
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