As global tensions rise over US tariffs and the prospect of a broader trade war, Malta’s Finance Ministry believes the country is well-positioned to withstand economic spillovers—thanks largely to its service-heavy economy and minimal direct trade exposure to the United States.
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In comments to Meet Inc, the Department, which forms part of the Finance Ministry, said that while Malta strongly supports free trade but remains alert to the risks of growing protectionism. The local economy, it said, was less vulnerable than others in the EU to a sharp downturn in global trade flows.
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Direct goods exports from Malta to the US represented just 3.71% of total exports between 2019 and 2024, the Department said. These exports—mainly fabrics, electronics, plastics, and rubber products—amounted to under €50 million annually.
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Any impact from tariffs would depend heavily on the specific duties introduced and how much of the cost is absorbed by US importers and how much of it is passed on to consumers.
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However, the Department warned that indirect exposure may be harder to assess and could potentially be more damaging.
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It explained how components manufactured in Malta may be exported to countries like Germany, where they are incorporated into finished products—such as cars—that are ultimately shipped to the US. In such cases, tariffs applied to the finished product could reduce demand for Malta’s inputs, even if they are not directly targeted.
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The US currently accounts for over 13% of global goods imports, and disruptions to that demand could reverberate through global supply chains. “The impact will depend on the tariff, the sensitivity of demand for these products to the price increase, and the degree to which US importers pass through the tariffs in the final product,” the Department noted.
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Beyond these direct and indirect channels, the Department highlighted a third layer of risk: the broader effect on global incomes. If Malta’s main trading partners experience economic slowdowns as a result of falling exports to the US, that could in turn reduce their demand for goods and services from Malta.
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Still, the Department expressed confidence in Malta’s ability to absorb these shocks, pointing to the country’s economic structure. As a services-oriented economy—with strengths in financial services, professional services, aviation, and digital sectors—Malta is less dependent on goods exports than many of its European peers.
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The Ministry’s analysts also stressed the resilience shown by Malta’s service exports during past periods of global volatility. “Our service exports have a strong reputation of resilience in the face of external shocks,” the Department said.
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While the Ministry does not currently have formal GDP-impact estimates related to the new US tariffs, it is continuing to monitor developments closely. For now, the outlook remains cautiously optimistic.
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“In the face of such adversity, we hope Europe emerges stronger,” the Department said. “The strength of the European economy is in Malta’s greater interest.”