Hirsch on the Economy: Poland reels as US tariffs take force
Rafał Hirsch
08.04.2025, 11:40
The newly announced trade tariffs by U.S. President Trump are set to cost Poland an estimated €2.3 billion, according to Polish PM Donald Tusk. (Getty Images)
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The newly announced trade tariffs by U.S. President Donald Trump are set to cost Poland an estimated 10 billion złoty (about €2.3 billion), according to Donald Tusk, the Polish prime minister. This figure represents roughly 0.4 percent of Poland’s GDP, which the prime minister acknowledged as notable, though not yet critical, provided the situation does not deteriorate further.
The tariffs currently affect the entire European Union, applying a 20 percent levy on a broad range of exported goods. Particularly concerning for countries like Germany and Slovakia with major automotive industries—and to a lesser extent for Poland, which plays a growing role in the EU’s car supply chain—is a separate 25 percent duty targeting imported vehicles.
While Trump imposed some tariffs during his first term, economists widely agree that this new escalation signals a more aggressive and systemic shift.
Many economic analysts are warning that these tariffs are a lose-lose proposition, likely to damage both sides of the Atlantic. In fact, the United States may feel the sharpest sting. Analysts and investors are voicing growing concerns about the heightened risk of a U.S. recession, as rising input costs and disrupted supply chains threaten corporate profitability and consumer prices.
The Polish stock exchange was not immune. The blue-chip WIG20 index—which tracks the 20 largest companies on the Warsaw Stock Exchange—plummeted by 6.4 percent on Friday, followed by another sharp drop of over 5 percent when markets opened on Monday. Over the course of last week, the index declined by more than 10 percent—its steepest weekly fall since March 2020, when global markets reeled from the onset of the COVID-19 pandemic.
Polish Central Bank signals rate cuts as inflation cools
As global markets reacted to Trump’s sweeping new tariffs, another development quietly stirred markets in Poland—a marked shift in tone from the country’s central bank governor. Adam Glapiński, head of the National Bank of Poland (NBP), surprised both economists and investors last week with a significant departure from his previously hawkish stance on interest rates.
revealed that the bank now sees room to lower interest rates by as much as one full percentage point before the end of the year. This is a dramatic pivot—just a month ago, the governor and the council had virtually ruled out the possibility of rate cuts in the near term.
Glapiński even hinted that a first cut could come as early as May, suggesting that he might personally propose the move. His remarks came just one day after the NBP released an unusually dovish policy statement, signaling a broader rethink within the institution.
Markets responded swiftly. One of the key interbank benchmarks in Poland—WIBOR, which determines the interest charged on many variable-rate loans—began to fall. For Polish mortgage holders with monthly rate adjustments, this could soon translate into lower loan repayments, providing some much-needed relief after two years of rising borrowing costs.
The central bank’s shift comes on the back of a string of inflation data that has consistently surprised to the downside. For three consecutive months—January, February and March—annual inflation has held steady at 4.9 percent. This is significantly below the NBP’s earlier projection of 5.3 percent for the first quarter.
Poland’s electricity prices could remain stable for households until the end of 2025, thanks to a combination of favorable wholesale market trends and regulatory interventions. Renata Mroczek, vice president of the country’s energy market regulator (URE), recently suggested that new electricity tariffs—soon to be proposed by energy suppliers—are likely to reflect prices close to 500 złoty per megawatt hour (about €117.60 at today’s exchange rate). That’s the same level at which household energy prices have been frozen since the start of the energy crisis.
If suppliers indeed propose rates around this level, it would allow the government to lift the price freeze without bills increasing. In such a scenario, the long-anticipated “unfreezing” of prices scheduled for the final quarter of this year would be largely symbolic, with no financial impact on consumers.
Poland’s major power companies are due to submit their new tariff proposals to URE by the end of April. These must be based on detailed cost calculations, which in turn reflect trading activity on the country’s wholesale electricity exchange.
As wholesale prices continue to fall, the likelihood increases that proposed household tariffs will come in below the critical threshold of €117.60. Should that happen, the government would be able to phase out the freeze without facing a political backlash over rising energy bills. However, if new tariffs do come in above the current frozen level, policymakers appear ready to extend the freeze once again.
For many Polish families, who have already been navigating rising food and housing costs, continued stability in energy prices would offer some welcome financial breathing room. And for the government, it could also help to support consumer confidence as the economy continues its fragile recovery from last year’s inflation-driven slowdown.
Fuel prices set to drop in Poland as global oil markets slide
There is growing evidence that fuel prices at petrol stations could soon drop by a significant amount, which would provide much-needed relief for drivers and businesses alike, provided that Orlen and other fuel retailers reflect global market trends in their pricing.
The price of Brent crude oil—the global benchmark—fell by 10 percent last week and has started the current week with an additional 4 percent drop. As of now, Brent is trading at its lowest level since April 2021. Meanwhile, petrol and diesel prices on global commodities exchanges have declined by over 8 percent and nearly 8 percent, respectively. Diesel, in particular, is now at its lowest wholesale price in nearly four years.
According to analysts at Reflex Brokerage House, which closely monitors Poland’s fuel market, these developments mean that 95-octane petrol prices are likely to dip below €1.41 per liter at most filling stations across the country this week. Diesel prices are also expected to fall—though they may remain just above the €1.4 mark for now.
Controversial health contribution cut for entrepreneurs passes
Poland’s lower house of parliament has passed a contentious law lowering health insurance contributions for the self-employed—a move expected to cost the state budget around €1.05 billion annually, starting in 2026. While the change is not immediate, it has already sparked heated debate due to its timing and potential consequences for the country's strained public healthcare system.
The reduction will not take effect until January 1, 2026, but it raises alarm among economists and healthcare advocates, as the National Health Fund (NFZ) is already grappling with serious financial difficulties. Critics argue that instead of cutting sources of funding, the government should be looking to boost contributions to the healthcare sector. The government has attempted to ease concerns by pledging that any shortfall in the NFZ will be covered by the central budget—a reassurance that does little to allay fears, given that the national deficit is already running high.
Opponents of the legislation have also pointed to questions of fairness. The new rules apply exclusively to entrepreneurs, who already benefit from more favorable contribution schemes compared to employees on standard work contracts. According to calculations by the consultancy firm Grant Thornton, a self-employed individual earning €2,287 per month will soon pay less in health contributions than a full-time employee earning minimum wage.
In more stark terms, for someone earning €3,430 per month, the new monthly health contribution would be €96, while an employee earning the same amount would still pay €266—a difference of €170 every month in favor of the entrepreneur.
Poland’s public finance deficit for 2024 reached a worrying 6.6% of GDP, according to official data published by Statistics Poland (GUS). The figure took analysts and policymakers by surprise, as the government had previously projected a significantly lower shortfall of just 5.7%. In absolute terms, the gap between public revenues and expenditures turned out to be more than €6.9 billion wider than forecast.
The overshoot has had immediate consequences for Poland’s public debt, which has now risen to 55.6% of GDP. This marks a steep increase from the previous year, when the debt-to-GDP ratio remained below 50%. Perhaps more notably, the nominal value of Poland’s public debt has, for the first time in history, crossed the symbolic threshold of around €462 billion.
This unexpected fiscal slippage casts doubt on the government’s current plans for 2025. According to the previous roadmap, Poland’s deficit was supposed to fall slightly this year—from 5.7% to 5.5% of GDP. But since the baseline for 2024 turned out to be much worse than expected, meeting this revised target now seems far more challenging. Achieving it may require either spending cuts, tax increases or an entirely new fiscal strategy.
The 6.6% deficit recorded in 2024 is the largest since 2020, when the Polish economy suffered a COVID-induced recession. Before that, similar levels of fiscal imbalance were last seen during the aftermath of the global financial crisis in 2009–2010. At that time, the government responded with a series of tightening measures, including raising VAT from 22% to 23%—a move that remains politically controversial to this day.
