EU GDP likely to be reduced by 0.2 pct due to US tariffs - EC
As a result of US tariffs, US GDP would be reduced by 0.8-1.4 percent until 2027, while the negative impact on the EU will be smaller and could amount to around 0.2 percent of GDP, according to the latest EC estimates presented by EU Commissioner for Economic Affairs Valdis Dombrovskis at the Eurogroup meeting in Warsaw,
The Commissioner stressed that although the EU welcomes the 90 days pause on reciprocal tariffs above 10 percent as it creates space for negotiations, we should not forget that the tariffs remain in place for almost all countries, and they represent a blow to the global economy.
"Furthermore, the US has not paused its 25 percent tariff on steel and aluminium and also the 25 percent tariff on cars and car parts," Dombrovskis recalled.
"(...) According to our latest model simulations on the US tariff impact, US GDP would be reduced by 0.8 percent to 1.4 percent until 2027. The negative impact on the EU would be less than for the US, about 0.2 percent of GDP," he added.
According to the Commissioner, if tariffs are perceived to be permanent or if there are further countermeasures the economic consequences would be more negative: up to 3.1-3.3 percent for the US, and 0.5-0.6 percent for the EU and 1.2 percent for world GDP, while global trade would decline by 7.7 percent in three years' time.
Dombrovskis stressed that Europe did not start this confrontation, nor it wants to continue it.
"Tariffs go against the political and economic logic of a deep and longstanding transatlantic trading partnership, valued at EUR 1.6 trillion in 2023," he concluded.
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