Portugal rolls out $11 billion package to help economy weather US tariffs

By Sergio Goncalves

LISBON (Reuters) -Portugal's caretaker government rolled out a package of loans and other measures worth more than 10 billion euros ($11.1 billion) on Thursday to help the economy weather the impact of U.S. trade tariffs.

"The world we knew has changed, we have to adapt and react, there is no certainty about what awaits us, but we were not caught by surprise," Prime Minister Luis Montenegro told a press briefing after a cabinet meeting that approved the plan.

Economy Minister Pedro Reis said around 70,000 exporters, as well as foreign investors relocating their businesses to Portugal, would benefit from the aid, which includes 5.2 billion euros in financing lines for companies' working capital and investment.

Another 3.5 billion euros is aimed specifically for investment by exporters, with 400 million in grants, and 1.2 billion in credit insurance.

A week ago, neighbouring Spain announced a 14-billion-euro package of similar aid, becoming one of the first major economies to come up with concrete steps to protect itself from new U.S. tariffs a day after U.S. President Donald Trump announced them.

Reis said Portugal's plan, despite coming later, was larger than Spain's considering the size of its economy, and had been welcomed by businesses during discussions with the government this week.

"Companies and foreign investors see these measures as positive because the Portuguese economy is more awake ... and it gives confidence," he said.

Unlike most of its euro zone peers, including Spain, Portugal has been running budget surpluses for several years and Reis ruled out a return to deficit, even if companies default on some loans from the package.

"I would be much more worried about the deficit if we didn't have a plan like this," he said.

The centre-right minority government, in a caretaker role pending an election in May, has forecast a surplus of 0.3% of gross domestic product this year after last year's 0.7% surplus.

The tariffs have rattled markets and drawn condemnation from world leaders facing an abrupt end of an era of trade liberalisation. On Wednesday, Trump decided to pause for 90 days reciprocal new duties he had imposed on multiple countries, even as he ratcheted up a trade war with China.

The United States accounted for around 6% of Portugal's total exports last year. Key exporters include oil company Galp, pharmaceutical firms, cork maker Corticeira Amorim and pulp and paper producer Navigator.

The Bank of Portugal has estimated the tariff war could trim its 2025 growth forecast of 2.3% by 0.9 percentage points.

($1 = 0.9014 euros)

(Reporting by Sergio Goncalves, writing by Andrei Khalip; Editing by Emelia Sithole-Matarise and Alex Richardson)