Unpredictable US tariffs: What they mean for Malta, the EU, and global trade stability

As the United States swings between broad tariffs, selective exemptions, and increasing duties on China, global trading partners are left trying to decode the true direction of US trade policy. Is there a long-term vision behind these moves, or is the world’s largest economy simply reacting to shifting political winds?

To explore the implications for Malta and the wider EU, BusinessNow.mt spoke with Professor Josef Bonnici, Economist, Former Governor of the Central Bank of Malta, and former Minister for Economic Services, and Silvan Mifsud, Director of Advisory Services at EMCS and Vice President of the Malta Chamber.

Strategic thinking or short-term tactics?

Both experts express concern over the apparent lack of consistency in US trade policy. While Mr Mifsud hopes there’s a coherent strategy behind the erratic moves, he acknowledges that “US trade policy right now seems a bit all over the place – especially with those sudden tariff moves.”

“The best case scenario,” he suggests, “is that these are being used as tools in a larger strategy to strengthen supply chains and push back against what the U.S. sees as unfair trade practices.”

Prof. Bonnici argues that “the current trade policy is characterised by an over emphasis on trade in goods,” even though the US actually has a surplus in services, which typically have “a higher value added than many of the manufactured goods it imports – especially in the case of low technology manufactured goods.”

He questions why the US would want to produce such goods at all, when it is already a developed economy with no real unemployment issue. Instead of sweeping tariffs, Prof. Bonnici believes it “would be much smarter to focus on particular products that they can produce in the US with a higher value added or for their national security.”

Volatility sends global investors on edge

For both, the unpredictability of US tariffs is having a destabilising effect on the global economy, particularly when it comes to investment and supply chain strategy.

Prof. Bonnici warns that “volatility is bad for business and bad for investment. It will damage economic growth and creates havoc with modern supply chains which today are well integrated world-wide.”

Mr Mifsud builds on this, saying that such tariff volatility “definitely has a ripple effect when it comes to global investor confidence and supply chain planning.” The uncertainty makes it “harder to forecast returns, so they might hold back on long-term commitments or shift focus to markets that feel more stable.”

He notes that the impact on Maltese and EU businesses may be less about direct tariffs and more about the knock-on effects – disrupted supply chains, changing demand patterns, and unpredictable sourcing costs. “So while it’s not impossible to plan ahead, companies need to stay really agile and build in flexibility.”

His advice? “That might mean diversifying suppliers, increasing inventory buffers, or investing in more localised or closer production where possible.”

A transactional approach from the US?

The pattern of US tariff changes – imposing broad measures, rolling them back, then targeting China more aggressively while exempting key sectors – sends what Prof. Bonnici calls “a lack of appropriate prior assessment of the impact of tariffs.”

He believes the result is a confusing message to global trading partners, one that reflects the deep uncertainty within US trade policy itself.

Mr Mifsud agrees that the message is mixed. “On one hand, it signals that the US is willing to use tariffs as leverage and isn’t afraid to disrupt the status quo… On the other hand, the rollbacks and exemptions show that the U.S. is still open and willing to adjust its approach when it sees mutual benefit or too much domestic or market pushback.”

In his view, the US is shifting toward a more transactional and security-focused model of trade – one that makes it “harder for other countries to predict US actions, but it possibly also opens the door for them to negotiate more directly and strategically.”

What should Malta and the EU do next?

In this fragmented global environment, both experts call for a dual strategy: Strengthen regional integration while aggressively diversifying international partnerships.

Prof. Bonnici asserts that “deepening regional ties is always an advantage while finding alternative markets with other trading nations has become an attractive policy.” He warns that “the US risks becoming more isolated with its current fixation on trade wars and the dubious benefit from such a policy.”

Mr Mifsud echoes this, but also draws on recent EU policy thinking. He says, “there is further scope for the EU to strike a smart balance between deepening integrations and diversifying their global trade relationships.”

Internally, he highlights the importance of implementing recommendations from both the Letta and Draghi reports to enhance EU cohesion. Externally, he urges stronger ties with stable partners like the UK and Mediterranean neighbours, as well as emerging markets in Africa, Latin America, and Southeast Asia.

“Overreliance on any single bloc or region isn’t a great idea when the global landscape is this volatile,” he notes, particularly in critical sectors such as energy, technology, and healthcare.

Ultimately, Mr Mifsud believes “the smartest move is a mix: Deepen integration at home amongst EU member states, while actively exploring and expanding trade links abroad.”

While the United States may be using tariffs as a geopolitical tool, the unpredictable nature of its trade moves is undermining investor confidence and putting strain on supply chains worldwide. For Malta and the EU, the path forward involves adaptability, regional strength, and a broad view of global opportunities.

As Prof. Bonnici puts it plainly: “Volatility is bad for business.” And in a world where even the largest trading powers appear to be acting on impulse, staying agile and building smart partnerships may be the most valuable tariff shield of all.