Despite Cyprus’ relatively modest trade volume with the US, the island could still experience indirect effects of US tariffs on European goods, warned Sofronis Clerides, professor of economics and dean at the University of Cyprus.

Clerides explained to the Cyprus News Agency (CNA) that while the direct impact on Cyprus might be limited, the broader economic slowdown caused by these tariffs could still affect the country.

Commenting on recent statements by US President Donald Trump about imposing tariffs against European products, Clerides explained that such measures have already disrupted the international economy, as seen with previous tariffs on Canada, Mexico, and China.

“This tariff war is not good news; it might lead us into unpredictable complications,” he said, emphasising the difficulty in foreseeing the full consequences at this moment.

The economist pointed out that these tariffs would likely cause an increase in US prices for imported goods and a reduction in exports from affected countries, particularly impacting sectors like pharmaceuticals, cars, and machinery.

This slowdown in economic activity would hit export sectors hardest, presenting significant challenges for Europe.

Clerides also touched on the strategic use of tariffs by Trump, suggesting they are employed as a bargaining chip to achieve broader US policy goals.

“What’s new this time is that Trump seems much more determined to take tough measures to advance his country’s interests, using tariffs as a tool to press for other issues,” he stated.

This was in reference to the demands on Mexico for immigration control, as well as holding Mexico, Canada and China responsible for the production of the opioid fentanyl, which has caused devastating addiction problems in Americans.

“This instrumentalisation of tariffs to achieve purposes beyond economic, such as increasing defence spending, is the new approach we are seeing now,” Clerides added.

Asked about the potential European reaction, he said that a political response would be inevitable but could escalate the trade war, noting the imbalance in economic dependence.

“The difficulty is that Europe is much more dependent on America than vice versa,” Clerides stated.

“The American economy, being larger and more self-sufficient, is less dependent on trade, which gives Trump a perceived advantage,” he concluded.