1008 GMT - Donald Trump's trade policy announcements over the weekend raise the question of whether there is a bigger risk from tariffs to the eurozone than previously thought, according to Capital Economics' Andrew Kenningham. A 10% universal tariff imposed by the U.S. might shave 0.1% to 0.2% off eurozone GDP, he says in a note. But a 25% tariff, as imposed but suspended on Canada and Mexico, would have a more-than-proportionately larger effect because it would be harder for companies and exchange-rate moves to cushion the blow, Kenningham warns. A ball-park estimate is that would cut eurozone GDP by around 0.5%, leaving growth close to zero this year. Additionally, a prohibitive tariff of, say, 100% on European vehicles could on its own push Germany into recession. (edward.frankl@wsj.com)
(END) Dow Jones Newswires
February 04, 2025 05:08 ET (10:08 GMT)
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