As the United States and the European Union (EU) have announced plans to impose 25% tariffs on each other's imports, the European Central Bank (ECB) has projected that the Eurozone (20 countries using the euro) economic growth rate could decrease by 0.5 percentage points in this scenario.
On the 20th (local time), Christine Lagarde, President of the ECB, appeared before the European Parliament's Economic and Monetary Affairs Committee and stated, "If the United States applies a 25% tariff on European imports, the Eurozone growth rate is expected to decline by 0.3 percentage points in the first year," adding, "If Europe responds by raising tariffs on American imports, the decrease could widen to 0.5 percentage points." She further explained, "The economic growth impact caused by tariffs will be concentrated in the first year and will diminish over time, but the negative effects on production will continue."
President Lagarde noted that the EU's retaliatory tariffs and reduced demand for European goods in the U.S. could cause the euro's value to drop, which might temporarily raise inflation by about 0.5 percentage points. In the medium term, she predicted that inflationary pressures would ease due to slower economic activity. She also emphasized that there is significant uncertainty surrounding this scenario, including the possibility of global supply chain restructuring.
Earlier, U.S. President Donald Trump announced plans to impose a 25% tariff on European imports, including automobiles. In retaliation for the U.S.'s 25% tariffs on steel and aluminum, which took effect on the 12th, the EU decided to impose tariffs of up to 50% on American products such as whiskey starting next month.
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