How U.S. Tariffs Will Affect Armenia

The 10% tariff imposed by the U.S. government on goods exported from Armenia will not cause significant economic damage to the country, according to economist Agasi Tavadyan in an interview with Armenpress. He noted that the volume of exports from Armenia to the U.S. is too small to have a critical impact on the Armenian economy. Conversely, this situation could deepen Armenia’s economic ties with EAEU countries, given that trade with those nations is conducted duty-free.

To grasp the overall situation, it is essential to look at the key indicators of the trade balance between Armenia and the U.S., which Tavadyan highlighted.

Prior to 2020, the volume of Armenian goods exported to the United States was around $50 million. This figure increased to approximately $80 million in the following two years but nearly halved in 2023-2024, falling to around $40 million.

A significant portion of exports to the U.S., about 20%, is attributable to gold and diamonds, while around 15% consists of both alcoholic and non-alcoholic beverages. Fewer exports are dedicated to canned vegetables and dairy products. Tavadyan pointed out that, aside from the volume of exported goods, the range of products is also limited, meaning that these items can be easily replaced by products from other countries in the U.S. market.

In 2021, the total exports from Armenia to the U.S. constituted roughly 2.5% of Armenia's overall exports. However, the economist also noted a considerable increase in re-exports, which now account for approximately 75% of Armenia’s exports.

“Taking this into account, we can state that currently, about 1.5-2% of Armenia’s net exports are directed to the U.S.,” Tavadyan said. Until 2021, this figure exceeded the export volumes by about 20-60%, totaling around $100 million. In the next two years, it surged to about $550 million in 2023, mainly due to a rise in re-exports of vehicles from North America to Russia. However, the Russian government imposed a rule that limits each individual to importing only one vehicle per year for resale in the country, promoting the development of local auto production. Shortly thereafter, Georgia also introduced a tariff on vehicle re-exports from Armenia. Consequently, this action curtailed vehicle re-exportation from Armenia and subsequently reduced the volume of imports from the U.S.

Tavadyan finds it noteworthy that the U.S. has not applied tariffs on a limited number of countries, including Russia and Belarus. The tariff has primarily been set based on the logic that the U.S. authorities double the tariff rate imposed by the respective country or union on products imported into the U.S. For instance, the European Union applies an average tariff of 39% on goods imported from the U.S. Until recently, EU countries imported their goods into the U.S. at zero tariff rates, which has now changed to a 20% tariff.

Vietnam imposed a 95% tariff on American goods, prompting the U.S. to respond with a 42% tariff. The lowest threshold for U.S. tariffs is set at 10%, and Armenia falls within this bracket. Tavadyan believes that this will significantly impact the EU economy, which is heavily dependent on the U.S. economy.

This decision will have considerable political repercussions. He noted that the current U.S. government has altered its approach: while previous administrations pursued a globalization-centered policy, there has now been a shift towards a multipolar regional approach.

“In other words, the U.S. is now more interested in neighboring regions and countries—namely Greenland, Panama, and Canada—than in other states or even the European Union. This will bring about changes in the global economy. For example, the role of the World Trade Organization, which governed tariff-free trade globally, will diminish. Globalization trends will also decline, giving way more to nationalist trends. This signals that the world is no longer unipolar but rather multipolar,” Tavadyan explained.

Exports of goods from Armenia to the U.S. will not suffer significantly as their volume is limited. Therefore, the impact on the Armenian economy will be minimal. Instead, this serves as a signal for Armenian businesses to deepen economic relations with EAEU member states, with whom trade is conducted duty-free as members of the union. In the past five years, Armenia’s exports to EAEU countries have increased fivefold, while exports to the EU have decreased by about 10%. In this context, Tavadyan also emphasized the importance of expanding trade volumes and geography with other countries.