Analysts and traders are again concerned about Donald Trump's potential plan to reintroduce import tariffs. The eccentric billionaire and US presidential candidate is ready to implement this plan. However, experts believe this scenario carries significant risks for Europe’s economy.
Currency strategists at Capital Economics warn that US import tariffs could substantially damage Europe’s economy. Major sectors, such as automotive and equipment manufacturing, would be particularly hit hard, as they heavily rely on sales to the United States.
According to a report from Capital Economics, these tariffs could lead to increased costs for European companies that export their products abroad. Analysts are convinced this would reduce their competitiveness in the global market.
Such a situation is likely to decrease demand for European goods in the US market. This, in turn, would result in reduced production and massive job losses in the affected industries, experts highlight.
Among the broader economic consequences, Capital Economics points to a slowdown in Europe’s GDP growth and a decline in investor confidence. The unpredictability of US trade policy could lead to lower capital investment in European industries, which may hinder economic progress.
Additionally, the introduction of import tariffs could complicate the European Central Bank’s efforts to combat inflationary trends that might arise amid the increased cost of imported goods.
