In a striking development, Donald Trump’s looming 25% tariffs on European Union imports are poised to unleash significant economic turbulence, according to the Kiel Institute, a prominent German think tank. Their analysis warns that such levies could drastically curtail EU exports to the US by up to 17%, potentially shrinking the EU economy by 0.4% and diminishing American GDP by 0.17%. This forecast suggests a profound shift in transatlantic relations, hinting at a looming economic shock for both sides.
The fallout doesn’t end there. In a cyclical response, the EU is likely to retaliate with their own tariffs, which could double the impact of the initial measures while sending inflation skyrocketing by an estimated 1.5 percentage points. The German manufacturing sector, particularly vulnerable, could see exports plunge by nearly 20%, further stressing an industry already facing challenges.
Trump’s proposed 25% tariffs on EU imports could lead to economic turmoil, with major losses in exports and growth for both the EU and US. The Kiel Institute warns of a 0.4% contraction in the EU economy and retaliatory tariffs from the EU that could exacerbate inflation. The German manufacturing sector is expected to be hit hardest, with exports potentially declining by 20% amid rising uncertainty for businesses.
The implications of Trump’s tariff threats resonate far beyond trade figures. As uncertainty looms, businesses may face mounting challenges in planning their next moves, risking economic growth on both sides of the Atlantic. The prospect of disruption and rising costs for American consumers adds a layer of complexity, suggesting that, in this unfolding scenario, both the US and the EU must brace for significant economic consequences.
Original Source: www.theguardian.com
