Tariffs hurt, even if some are just threats

Tariffs don’t have to be imposed to wreak economic harm – threats are enough. So the recent flurry of announcements by the US, followed in some cases by swift postponements, are already increasing trade uncertainty and making it less likely that companies will invest.

What you will learn:

• We estimate the uncertainty around trade could hit Eurozone GDP by 0.2% over the next 12 months, with a greater impact on investment and durable goods spending.
• We estimate that the small, open EU economies plus Italy and Belgium will be the most affected by trade uncertainty, whereas the Nordics and Portugal are relatively insulated. We also think trade uncertainty, usually benign for Germany, will have a bigger impact this time.
• Trade uncertainty could remain elevated throughout Trump’s second term and it will affect economies above and beyond imposed tariffs. In addition, the Ukraine ceasefire negotiations and uncertainty over US security guarantees is increasing geopolitical risk in Europe