The Central Bank of Estonia published remarks by Governor Madis Müller warning that free trade can no longer be taken for granted and that small, open economies such as Estonia stand to lose most if protectionism spreads. Eesti Pank estimates that an increase in global trade restrictions could reduce Estonian economic growth by around half a percentage point, even if United States tariffs have only a limited direct impact. The central bank highlighted that the main transmission channel would be indirect, as Estonia’s key export markets are themselves dependent on the US market. Trade restrictions and tariffs were reported to have featured prominently at the International Monetary Fund and World Bank annual meetings, and were linked to the IMF’s latest downgrade of growth outlooks for the United States and much of the rest of the world. The remarks argued that tariffs tend to raise prices, weaken competition and slow growth, including by increasing political and economic uncertainty that affects investment and consumption decisions, and cautioned against Europe responding with its own high tariffs in favour of keeping other trade relationships functioning and enabling businesses to re-route supply chains and find alternative markets.
Central Bank of Estonia 2025-04-30
Central Bank of Estonia estimates wider trade restrictions could cut Estonia’s growth by around 0.5 percentage points
The Central Bank of Estonia, via Governor Madis Müller, warned that rising protectionism could impact small economies like Estonia, potentially reducing growth by half a percentage point. Estonia's key export markets are indirectly affected by US trade policies, discussed at recent International Monetary Fund and World Bank meetings. The remarks cautioned against Europe imposing high tariffs, advocating for maintaining trade relationships and enabling businesses to adapt supply chains.