Trading Partner Portal: Portugal
Overview
Trade Overview
Portugal lies on the Atlantic coast in southwestern Europe, with Spain as its neighbor and surrounding its entire boarder. It is closely tied, culturally and geographically, with its Mediterranean and European neighbors. It hosts a variety of climates from coastlines, mountains, and lowlands, and has nearby island autonomous archipelagos of Maderia and the Azores. Its capital city Lisbon is the cultural and economic center, as it has a rich maritime history. Britannica
Portugal is classified as a high-income country that has developed a strong service market-based economy that accounts for approximately 66% of its GDP. In 2023, its population totaled 10.3 million people, with nominal GDP at $276 billion. Like other European countries, a great deal of Portugal’s trade is within Europe and surrounding countries; however, the United States is Portugal’s fourth largest export destination. Travel services, renewable energy, and tourism have been key industries in economic growth since the Covid-19 pandemic, with renewable energy expected to grow by 20% by 2026. OEC World, Statista, U.S. Department of Commerce.
U.S.-Portugal Trade
The U.S. exported roughly $2.3 billion to Portugal in 2023, with Portugal being the U.S. 63rd export market. Top 5 exports for Portugal were oil and gas ($835 million), transportation equipment ($431 million), chemicals ($204 million), agricultural products ($176 million), and petroleum and coal products ($155 million).
In this same year the U.S. imported $6.5 billion in products from Portugal, with Portugal being 47th in U.S. import markets. The top imports were chemicals ($1.6 billion), petroleum and coal products ($1 billion), apparel and accessories ($426 million), plastics and rubber products ($411 million), and computer and electronic products ($379 million). U.S. Department of Commerce
Portugal-California Trade
California continues to be the state with the largest Portuguese population. About 350,000 Portuguese Americans live in California, with most from the Azores islands. The first wave of Azorean immigrants came in the late 1900s to 1920s seeking better opportunities in America. On the west coast in California there are Portuguese communities in San Francisco, Oakland, San Jose, Santa Cruz, as well as in dairy farming areas in the Central Valley, the Los Angeles Basin, and San Diego, in connection to Portuguese fishermen and settlers emigrating to California from the Azores. The oldest company in Portugal is Azores Airlines.
California is also one of the top U.S. states for exporting and importing for Portugal. In 2023, California exported a total of $74 million in products to Portugal, with top products being computer and electronic products ($18 million), non-electronic machinery ($15 million), transportation equipment ($8 million), fabricated metal products ($6 million), and miscellaneous manufactures ($6 million). U.S. Department of Commerce
Imports from Portugal were a total of $517 million. With wood products ($157 million), plastics & rubber products ($103 million), apparel & accessories ($43 million), leather & allied products ($37 million), and processed foods ($28 million), being the top five imports. trade.gov
FDI -Portugal
Foreign direct investment from the U.S. into Portugal was roughly $3.8 billion in 2022, which according to the Bureau of Economic Analysis, is almost a 97% increase from 2021 figures. The investment position of Portugal into the U.S. was $899 million, which was only a 0.4% increase. Key sectors for investment would be in energy, agriculture, automotive, and information and communications technology.
Portugal and the World
Portugal ranks 44th in world exporters according to the International Trade Administration, with total exports in 2022 at $82.6 billion. They also ranked 37th in world importers, with total imports from the world at $115.3 billion.
Portugal is a longstanding WTO member, joining in 1995, they are also a member of the General Agreements on Tariffs and Trade (GATT), NATO, the UN, IMF and more. Aside from EU members, the U.S. is one of the largest trading partners with Portugal, and both countries have strong diplomatic ties. However, China is one of the largest investors and owners of much of Portuguese infrastructure, but this has begun to change as of 2023. It has adopted the euro as its main currency. It’s ports and boarders are open to free trade with EU members.
Trade Agreements
Trade Agreements and Issues
Portugal has many trade agreements through its membership with the EU, which gives it free trade agreements with EU member countries, and outside agreed upon treaties. Through the customs union it has trade agreements with New Zealand, Singapore, South Korea, Japan, the U.S., and others. It is also currently negotiating and renegotiating with China, Chile, the Philippines, and Singapore.
Portugal has steadily beat expectations for economic growth within the EU, however, is does face issues of possible overvalued real estate and increased interest rates as of 2023. The CFP, Public Finance Council has also noted that productivity growth is a large concern macroeconomically, as it could mean low wages for Portuguese workers. U.S businesses may also face issues of competition with European companies, as they will know the business culture and not have the same the tariffs and regulations. There are currently issues with low birth rates and a growing number of an aging workforce, which can have long-term consequences on the economy.
Transatlantic Trade and Investment Partnership (TTIP)
Portugal is one of the nations that is currently involved in negotiations for the Transatlantic Trade and Investment Partnership (TTIP) with the rest of the European Union and the United States. The United States and the European Union have a strong bilateral trade relationship totaling $698.7 billion in 2015. A free trade agreement, such as TTIP, desires to strengthen that relationship by eliminating tariffs, aligning compatible regulations to open trade, and furthering trade in the service sector.