500% tariffs? Shocking new US proposal could wreck Hungary’s economy!

A group of US senators (both Democrats and Republicans) has put forward a package of sanctions that could have serious economic consequences for many countries (including Hungary) around the world, especially those that continue to buy significant amounts of Russian energy.

According to Bloomberg, one of the most stringent measures proposed is the imposition of a 500% tariff on imports into the US market for countries that do not renounce their purchases of Russian oil, gas and uranium.

Hungary is one of the countries whose economy and energy supply could be significantly affected by this measure. At present, more than 80% of Hungary’s oil imports come from Russia and its natural gas supply is also heavily dependent on Russian sources. According to Portfolio, under the new US proposal, Hungary could face a choice between gradually cutting its dependence on Russian energy sources or facing the loss of the US market and a significant tariff burden.

The effect on the Hungarian economy

Hungarian companies export around USD 9 billion worth of goods to the United States every year. A 500% tariff could drastically reduce the competitiveness of Hungarian exporters, leading to serious economic problems in many industries. In particular, the automotive and electronics sectors, as well as the food industry, could be affected, as these are the main pillars of Hungarian exports. If the US does impose tariffs, the Hungarian government will be forced to look for alternative markets for the products concerned.

Hungary faces two possible paths, one option could be to diversify its energy sources at an accelerated pace. One way to do this is to move towards a fast transition from Russian to Russian crude oil. MOL estimates that the earliest date for a full divestment from Russian crude is the end of 2026. The other option is that Hungary continues to opt for Russian energy, and US punitive tariffs could make Hungarian exports to the US significantly more expensive. This could lead to a restructuring of export markets and a possible economic downturn.

The dilemma of natural gas supply

Alongside oil, the issue of natural gas is also key. Hungary imports billions of cubic metres of natural gas from Russia every year, mainly through the Turkish Stream pipeline. Although gas supplies from the West and the South have increased, there is currently no infrastructure that can fully replace Russian gas supplies. A possible US sanction would require Hungary to urgently develop a new strategy to achieve energy independence.

Political and economic games

Although the US tariff measures are officially aimed at weakening the Russian economy, in reality, they are part of a global geopolitical game. The tariff threat is primarily directed against China and India, as these countries are the largest buyers of Russian energy. Hungary, however, could find itself in a difficult position as a side effect of this process. As a member of the European Union, it would be legally difficult to impose such a tariff on Hungarian products, but if the US were to try to do so, it could seriously affect the entire EU trading system.

Hungary could be forced into a situation of duress if the US tariff measures are enacted. The country may decide to accelerate its move towards energy independence, but this could have long-term economic costs. If, on the other hand, it sticks to Russian imports, it will face significant economic challenges and export market losses. In the coming months, the Hungarian government’s choice of strategy in this increasingly complex geopolitical situation will be crucial.

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