The President of the Govern of the Balearic Islands, Marga Prohens, has announced a short-term action plan aimed at mitigating the negative effects on the islands’ businesses from the tariffs imposed by the United States. The new tariff policy of the US president, Donald Trump, has generated an economic whirlwind globally, destabilising markets and endangering the competitiveness of businesses, all while intensifying trade tensions between the major global economies. Trump announced he would impose a 20% trade tax on the European Union, although he has hinted it might be reduced to 10% temporarily.

tariffs

Photo: CAIB.

The action plan, which has an initial allocation of 6 million euros, will be implemented over the next four months, although the situation will continue to be assessed in order to take additional medium- and long-term measures.

Action lines of the action plan:

  1. Support for competitiveness and exports:

    • Allocation of 3.5 million euros to support the competitiveness and exports of Balearic companies.

    • This fund is designed to cover the additional costs arising from the tariffs and allow companies to continue exporting to the United States without losing competitiveness in their prices.

    • For this aid to be effective, it is necessary to suspend the European minimum aid rules (de minimis), which limit the amount of aid companies can receive. The Govern has requested a relaxation of this rule to address the extra costs arising from the island’s remoteness.

  2. Promotion of local products:

    • Extraordinary investment of 2 million euros in the promotion of local products, especially agri-food products.

    • The strategy includes promotion both in the domestic market and in international markets such as Spain, Germany, France, and the Netherlands.

    • Additionally, the implementation of the regulation requiring a 3% consumption of local products in the Balearic Islands’ tourist establishments will be encouraged.

  3. Commercial mission to open new markets:

    • Initial contribution of 500,000 euros to fund commercial missions aimed at opening new markets for Balearic products, especially in Asia and Latin America (Mercosur).

    • This initiative will be carried out in collaboration with the chambers of commerce and with the financial support of the Govern.

Trade with the United States

The United States is the ninth-largest importer of goods from the Balearic Islands, with a total value of 312 million euros over the past eight years. Among the exported products are manufactured goods like footwear and soap, as well as agri-food products such as carob gum. Moreover, the United States is one of the main countries from which the Balearic Islands imports goods.

In the coming days, the Govern will continue working on additional measures, and a meeting with parliamentary groups will be held to explain the action plan and gain their support during this difficult situation.