Word of the month: Reliability

The timing was impeccable—though for all the wrong reasons. On the very same day, Donald Trump provided the reason of why such deals matter, announcing a hike in tariffs on European cars and trucks from 15% to 25%. His justification? The supposedly "sluggish" progress of a trans-Atlantic trade pact that has been on hold since the US Supreme Court declared his administration’s 2025 import tariffs as unconstitutional.

For Austria, the immediate economic benefits of the EU - Mercosur agreement are modest: a projected 0.1% increase in total exports, with the sectors of manufacture of machinery and equipment, motor vehicles, and chemicals set to gain the most. But the real value here is symbolic. In an era of US policy volatility, a robust trade agreement acts as a hedge against uncertainty. By leaning into the "Common Market of the South," Brussels is signaling that the EU remains a reliable partner committed to a rules-based system while Washington at the moment is not.

Klaus Weyerstraß
IHS Researcher
Business Cycles, Growth and Public Finances

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