EU’s Economic Growth Faces Setbacks from U.S. Tariffs
By David McHugh, Frankfurt, Germany (AP)
Europe’s economy displayed promising growth in early 2025, with a 0.4% increase in gross domestic product (GDP) across the eurozone’s 20 countries, up from 0.2% in the previous quarter. However, optimism swiftly diminished following U.S. President Donald Trump’s announcement of new tariffs, which impact nearly all U.S. trading partners, including a significant 20% on goods imported from the EU.
Despite a temporary 90-day pause on these tariffs, the uncertainty surrounding future negotiations has left many skeptical about any potential reductions. Existing tariffs on steel, aluminum, and automobiles remain in effect, leading to increased costs for companies importing European goods, raising concerns about rising consumer prices.
This tariff environment has eroded business and consumer confidence, with the European Commission’s economic sentiment indicator dropping to its lowest level since December. Analysts warn that without substantial changes in U.S. trade policy, economic activity in the eurozone could remain sluggish.
In contrast, prior to Trump’s tariff announcements, positive indicators included a robust job market and decreasing inflation. The German parliament’s recent approval of a significant investment fund, aimed at fostering pro-growth infrastructure, raises some hope for economic revitalization. However, the prospect of growth for Germany, the eurozone’s largest economy, has been downgraded to zero for the year.
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