Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnWeb3SquareMore
Trade
Spot
Buy and sell crypto with ease
Margin
Amplify your capital and maximize fund efficiency
Onchain
Going Onchain, without going Onchain!
Convert
Zero fees, no slippage
Explore
Launchhub
Gain the edge early and start winning
Copy
Copy elite trader with one click
Bots
Simple, fast, and reliable AI trading bot
Trade
USDT-M Futures
Futures settled in USDT
USDC-M Futures
Futures settled in USDC
Coin-M Futures
Futures settled in cryptocurrencies
Explore
Futures guide
A beginner-to-advanced journey in futures trading
Futures promotions
Generous rewards await
Overview
A variety of products to grow your assets
Simple Earn
Deposit and withdraw anytime to earn flexible returns with zero risk
On-chain Earn
Earn profits daily without risking principal
Structured Earn
Robust financial innovation to navigate market swings
VIP and Wealth Management
Premium services for smart wealth management
Loans
Flexible borrowing with high fund security
The EU downgrades 2025 growth forecasts due to tariff uncertainties

The EU downgrades 2025 growth forecasts due to tariff uncertainties

CryptopolitanCryptopolitan2025/05/19 15:55
By:By Enacy Mapakame

Share link:In this post: The European Commission now expects the euro area to expand by just 0.9% and the full EU by 1.1% in 2025 Forecasts assume current US duties remain at 10% for most goods (25% on steel, aluminium and cars) for 90 days Further trade fragmentation, climate disasters, and slight fiscal deterioration also pose downside risks.

The European Commission has revised down its growth projections for both the euro area and the wider EU, primarily because of the lingering uncertainty and heightened barriers in international trade stemming from US tariffs.

In its annual spring forecast, released on Monday, the Commission now anticipates that the 20 countries sharing the euro will expand by just 0.9% in 2025, down from the 1.3% growth projected last November, while the full bloc of 27 member states is expected to grow by only 1.1%, as opposed to the 1.5% previously envisioned.

US has maintained high duties on EU products

This downgrade reflects the impact of US President Donald Trump’s administration maintaining elevated duties on key European exports, 10% across most goods and up to 25% on steel , aluminium and automobiles, and the knock-on effects of tit-for-tat measures by China and other trading partners.

Commission economists stress that the resulting “weakening global trade outlook” and “higher trade policy uncertainty” have materially depressed export growth, with the latter now at levels not seen since the early days of the Covid-19 pandemic.

Valdis Dombrovskis , the EU’s Economy Commissioner, told reporters that the prospect of enduring or even escalating trade tensions “continues to weigh heavily on Europe’s external demand.” He warned that further fragmentation of world trade could both drag down growth and rekindle inflationary pressures.

See also Investors bet Amazon will fare better than its competitors in Trump’s trade war

Indeed, while consumer prices in the euro area are forecast to ease toward the European Central Bank’s 2% target by next year, any fresh rounds of tariffs or retaliatory measures could upset that disinflationary trend.

The forecasts assume a baseline in which US duties remain at their current levels for 90 days, following a temporary decision in April to halve steel, aluminium, and vehicle tariffs from 25% to 10%.

Brussels officials have used this pause as their scenario for the coming months, though they acknowledge that reaching a comprehensive trade agreement with Washington would be the most effective way to bolster Europe’s growth prospects. Similarly, deepening trade ties with emerging markets and accelerating negotiations on new free-trade deals could provide additional upside.

The Commission cites other factors that will add to the bloc’s woes

Beyond external headwinds, the Commission flags several other downside risks . Climate-related disasters, increasingly frequent and severe, pose a persistent threat to productivity and output.

Domestically, public finances in the aggregate euro area are expected to slightly deteriorate; the budget deficit is projected to rise from 3.1% of GDP in 2024 to 3.2% this year and 3.3% by 2026. The debt-to-GDP ratio should climb from 88.9% to just under 90% this year and to 91% in 2026.

See also Jamie Dimon warns of U.S. recession despite the recent pullback in tariffs

Nevertheless, the Commission also sees some silver linings. Unemployment in the euro zone is forecast to continue its gradual decline, reaching an average of 6.1% by 2026. Consumer price inflation, after peaking at 2.4% last year, should decelerate to about 2.1% in 2025 and further to 1.7% in 2026, assuming no fresh shocks.

And if EU members were to channel more resources into defense and strategic industries, that spending could help stimulate growth even amid uncertain global trade conditions.

In its report introduction, Maarten Verwey , director-general of the Commission’s Economy Department, lamented that “the world was largely unprepared for the sharp protectionist shift in US trade policy.” He argues that the recent temporary tariff reductions should serve as a stepping stone toward more durable, multilateral solutions.

Without such progress, however, the Commission cautions that Europe’s growth trajectory will remain subdued, with only a moderate rebound to 1.4% growth in the euro area and 1.5% for the EU as a whole expected in 2026.

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Locked for new tokens.
APR up to 10%. Always on, always get airdrop.
Lock now!