American Tariffs - How can Portuguese companies react?

US Tariffs: the perfect storm and the agility of Portuguese SMEs

In an increasingly interconnected global economy, where cross-border political decisions can shake local stability, the recent imposition of new trade tariffs by the United States has come to remind Portuguese Small and Medium-sized Enterprises that the world does not stop and that those who do not adapt get left behind.

Portugal and the United States: a relationship at risk

The United States remains Portugal's main non-EU partner. In 2023, exports of goods to this market accounted for about 2% of our GDP, and services reached 1.8%. Although most exports are subject to reduced tariffs (between 0% and 2%), a 6% share already faces tariffs exceeding 10%, affecting strategic sectors such as textiles, beverages, leather, non-metallic minerals, and electronics.

The numbers speak for themselves: in some of these sectors, more than 70% of exports are destined for the USA. The consequence? A direct vulnerability to protectionist measures, which jeopardise the sustainability of business models centred on a single market.

Between margin and marginalisation

The imposition of new tariffs inevitably translates into a price increase for the American consumer and, consequently, a contraction in demand. For Portuguese companies, the first response is often the most difficult: sacrificing margins to maintain competitiveness.

Other strategies, such as setting up production capacity on American soil, are only within the reach of multinationals and imply high risks, not only due to the alteration of the cost structure but also due to the loss of competitive advantages resulting from national specialisation.

More worrying, however, are the indirect effects. Disruption in supply chains, volatility in production costs, and competitive pressure in parallel markets create a thick fog that clouds predictability and hinders strategic planning.

The strength of the tools within our reach

Despite the challenging scenario, Portuguese SMEs are not unarmed. On the contrary: there are instruments available that remain underutilised. The case of SIFIDE – Tax Incentive System for Corporate Research and Development – is a prime example. This tax benefit can allow companies with R&D activity to reduce their effective CIT rate by up to 5%. However, since 2006, only 0.62% of companies have used it.

It is a statistic that does not reflect disinterest, but rather a structural problem of a lack of literacy and proximity between incentives and the business fabric. Information does not arrive, the language alienates, and mechanisms do not translate into concrete action.

Another example is SICE – SME Internationalisation, under Portugal 2030. With non-repayable support of up to 40%, this instrument allows companies to expand into new markets and dilute the risk associated with the geographical concentration of exports.

From size to ambition

It is not Portugal's size that limits its international projection, but rather ambition – or the lack of it. Portuguese SMEs have proven, decade after decade, a remarkable capacity for adaptation. The openness of the Portuguese economy increased by more than 37% between 2004 and 2024, and the market share gain in exports was 28.2% in real terms.

This trajectory, built with effort and ingenuity, cannot be jeopardised by external changes. It requires a proactive reaction. It demands more than survival – it demands planning, innovation, and access to tools that already exist and make a difference.

The time to turn SMEs into Large Companies

The moment is one of choice. We can resign ourselves to the impact of tariffs, or we can see them as the wake-up call that forces us to transform our positioning. The key lies in stopping depending exclusively on external conditions and starting to invest with strategy.

Turning SMEs into large companies is not a slogan. It is a purpose that implies bringing knowledge, incentives, and ambition to the centre of the decision-making table. The opportunities exist. Now, only the courage to seize them is missing.