€11.1 billion support package to face U.S. tariffs
In April 2025, the Portuguese government announced an economic support package worth €11.1 billion to help around 70,000 companies cope with the impact of new trade tariffs imposed by the United States. The measure includes financing, subsidies, and credit insurance, and has been presented as a strong response to the challenges faced by national exporters.
The support aims to stabilize the economy, protect jobs, and reinforce external competitiveness, in coordination with the European Commission. However, concerns have been raised regarding the budgetary cost, the potential dependency of businesses on state aid, and the limited effectiveness if tariffs persist long-term.
Despite these challenges, the initiative represents a significant effort to cushion the effects of an adverse international environment.
Portugal requests activation of the fiscal flexibility clause to increase defense spending
In April 2025, Portugal requested the activation of the fiscal flexibility clause from the European Commission, allowing the country to increase defense spending by up to 1.5% of GDP without facing penalties for excessive deficits. Currently, Portugal spends 1.55% of its GDP on defense but aims to expand this investment, aligning with the European Union’s goals to strengthen military capabilities.
The increase of €3.5 billion annually will be allocated to modernizing the armed forces, focusing on technologies such as air defense and cybersecurity. However, this investment could pressure public finances if resources are not balanced with other essential sectors.
The government sought political consensus with the opposition before formally submitting the request, emphasizing the importance of a coordinated approach with the European Union. The measure aims to strengthen Portugal’s national security and contribute to the EU’s collective defense, but it brings fiscal challenges that require careful management.
