Eurozone Economy Expected to Take Early 2024 Hit from Trump Tariffs, Economists Predict: Reuters Poll
A majority of economists surveyed predict that Trump’s proposed tariffs—potentially including a 10% universal levy on imports and a 60% tariff on Chinese imports—could significantly slow the eurozone’s growth over the next few years. Around 85% of those surveyed expect these tariffs to be implemented early in the next year, with impacts potentially extending to inflationary pressures in the U.S.
ECB officials have also raised concerns. Bundesbank President Joachim Nagel warned that the tariffs could reduce Germany’s economic output by 1%, with risks of tipping the eurozone’s largest economy into negative growth.
In line with these developments, market expectations have shifted, with investors now anticipating more ECB rate cuts than Fed cuts through 2025. The ECB’s deposit rate is widely expected to drop by another 25 basis points in December, followed by further cuts in the coming months. While economists expect eurozone growth to stabilize at around 1.2% in 2025, risks remain to the downside, with rising protectionism adding to the uncertainty.
Meanwhile, inflation, which recently reached the ECB’s 2% target, is forecast to dip slightly but remain close to this level in the medium term. Economists suggest the ECB’s policy rate might even fall below neutral by 2025, especially if trade tensions under a new Trump administration persist and macroeconomic conditions weaken.
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