Tariffs and Currency Swings Squeeze Portuguese Exporters Serving the United States

Portuguese exporters can still be found at American trade shows handing out samples of textiles, wine and precision glassware, yet the smiles hide an uncomfortable reality. Even when sales hold up, the cheque that arrives back in Lisbon is worth less than it was a year ago. A stronger euro, fresh US tariffs and the decision by many firms to keep dollar-denominated prices unchanged have combined to squeeze profit margins to their tightest level since the pandemic years.

A Profitable Relationship Under Pressure

For most of the past decade the United States has been Portugal’s fastest-growing non-European client, accounting for roughly €5 B in goods last year. The latest studies from the Bank of Portugal, however, show a clear inflection point. Companies shipping to the US saw the growth rate of export values drop 7 percentage points in 2024-25 compared with sales to other destinations. Price growth fell 2 points, signalling an unusually rapid erosion of pricing power. Smaller firms, long celebrated for their agility, endured an even steeper 9-point setback, evidence that limited scale offers little shelter when trade policy shifts. All of this is occurring while demand in the US economy remains relatively healthy, suggesting the pain is being absorbed primarily on the Iberian side of the Atlantic.

Currency Swings Add a Second Headwind

Roughly 40 % of Portuguese goods sent across the Atlantic are invoiced in dollars. When the EUR/USD rate climbed about 12 % in the first half of 2025—hovering around 1.16 this autumn—exporters found themselves converting the same sticker price into fewer euros. Because contract rigidity prevents quick renegotiation, many chose to swallow the loss rather than risk losing shelf space in a market known for fierce retail competition. Analysts at CaixaBank note that an 8 % dollar slide since late 2024 translates into a similar dent in euro revenues for companies that do not hedge. While larger multinationals can offset part of the impact with financial instruments, the majority of Portugal’s 9,000 US-oriented exporters are SMEs with limited access to sophisticated currency hedging.

Textile Mills to Wineries: Who Feels the Pinch

Not all sectors carry the same weight in Washington’s tariff ledger. The textile industry—Portugal’s third-largest goods exporter—faces exposure close to 12 %, according to BdP modelling, a figure that encompasses cotton fabrics from Guimarães and high-end knitwear from the Cávado valley. Producers of non-metallic mineral products, a category that includes the famed Marinha Grande glass cluster, confront an 11.5 % exposure. The beverage sector, spearheaded by vinho verde and fortified wines, sits near 10 %. Official trade data paint an uneven landscape: shipments of pharmaceuticals swung wildly—down 87.8 % in June year-on-year only to rebound 16.2 % over the first semester—while exports of iron and steel products shrank almost 40 %. Conversely, transport equipment emerged as a rare bright spot, climbing nearly 18 % in July as carmakers redirected excess European inventory to US dealers.

Strategies on the Table: From Price Tweaks to New Markets

Management boards have responded with a mixture of price adjustments, market diversification and calls for government assistance. The political answer arrived in spring with the €10 B Programa Reforçar, which bundles cheaper credit, export insurance and grants for internationalisation projects. Privately, companies are doing the maths: shaving margins by 2-3 points is often deemed less risky than raising dollar prices in a segment already crowded by Asian rivals. The Associação Empresarial de Portugal continues to urge members to explore Canada, Mexico and the Gulf states, arguing that over-dependence on any single market leaves balance sheets exposed to currency or regulatory shocks. Meanwhile, adoption of forward contracts or options that lock in exchange rates remains subdued, partly because the minimum ticket size still exceeds the annual turnover of many family-owned exporters outside Porto and Braga.

What to Watch Next

With the US election cycle entering its decisive stretch, lobbyists in Brussels and Lisbon are monitoring whether the next administration softens the current tariff schedule. Equally important will be the pace at which the European Central Bank and the Federal Reserve diverge on interest rates; even a modest narrowing of the differential could bring the euro down toward 1.10 and hand exporters a reprieve. For now, boardrooms from Leiria to Vila Nova de Famalicão are budgeting for another year of tight margins, betting that staying present in the world’s largest consumer market—however painful—beats the long-term cost of ceding ground to competitors.