Euro Area, which is dependent on transatlantic trade and tariffs to return after Donald Trump’s second tenure.
The Institute of International Finance estimated that US tariffs could lower Euro Area GDP 0.4% in its Monday note. New tariffs may lead to an increase in prices, as many European countries are still recovering from the flu pandemic. “substantial economic hit,” The report also adds.
Germany, France, Italy and other countries are most likely to feel the impact. New policies will likely have an adverse impact on exports of machinery and industrial products from Germany and Italy. Germany, which is the largest US exporter, will also enter its second consecutive year with zero growth. IIF estimates that France may see its exports from the luxury and aeronautics industries drop up to 4% in Trump’s first term.
Bloomberg Economics has created a chart that shows how Trump’s tariff policy is much more rapid than his statements. These often cause global currencies to be impacted. These could take several weeks, if not even months depending on the extent to which Trump intends to use his International Emergency Economic Powers Act.
There’s likely to be some discrepancy, aside from timing, between Trump’s threat and the actual outcome (during Trump’s first term, Trump reversed his proposed tariff against Mexico when Mexico agreed to increased border patrol).
Truth Social will be a great place to watch the unfolding of policies and how next administration teases its plans.
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