What EU exports could be hit hardest by Trump’s 50% tariff threat?

Hours aft it was revealed that Germany's GDP had performed unexpectedly well successful nan first quarter—largely driven by beardown exports—the early prospects of Europe’s largest economy, and so nan wider bloc, collapsed dramatically.

US President Donald Trump mislaid patience past Friday, stating successful a societal media station that waste and acquisition negotiations pinch nan European Union were “going nowhere.” He threatened to enforce a 50% tariff connected EU equipment imported into nan United States, effective from 1 June.

Subsequently, aft talking pinch European Commission President Ursula von der Leyen complete nan weekend, he postponed imposing nan tremendous tariff until 9 July 2025, provided nary statement is reached earlier then.

“Europe is fresh to beforehand talks swiftly and decisively,” Von der Leyen said. “To scope a bully deal, we would request nan clip until July 9.”

What would a 50% tariff mean to nan EU economy?

Given that nan US was nan largest partner of EU exports of equipment successful 2024 (20.6%), worthy much than €530bn successful 2024, according to Eurostat, nan effect of specified a tariff is sizeable. 

Most analysts work together that it would surely consequence successful a recession successful nan eurozone, triggering nan European Central Bank to trim nan cardinal liking rates further than antecedently expected.

“A 50% tariff could substantially hamper maturation and punctual nan ECB to proceed its monetary easing,” analysts from backstage banking and finance location Edmond de Rothschild said successful an email. 

“If nan US management proceeds pinch its threat of 50% tariffs connected EU goods, and nan EU responds pinch a delayed and much constricted retaliation, a much accommodative monetary argumentation stance than nan presently forecast would beryllium warranted,” analysts from Barclays said successful an email, adding that it could perchance trigger a heavy recession successful nan eurozone which “would apt unit ECB's rates person to ZLB [when short word liking rates deed zero, ed.]”.

Before nan US President’s threat, nan European Commission lowered its economical forecast, factoring successful not only nan imaginable 10%-20% tariffs but nan awesome effect of uncertainty. That besides affected nan latest eurozone PMIs, which started declining, showing contraction successful services, while nan manufacturing assemblage was holding up better.

However, manufacturing is among nan cardinal sectors that are prone to suffer should nan US enforce precocious tariffs connected EU goods. 

According to a caller study by Eurostat, nan astir important equipment traded by nan EU and nan US are aesculapian and pharmaceutical products for exports, and petroleum for imports.

The EU’s apical 5 astir exported groups of equipment successful 2024 made up half (49.5%) of each exports to nan United States. The apical exports were medicinal and pharmaceutical products (22.5%), pinch their worth reaching astir €120bn past year. This class was followed by roadworthy vehicles (9.6%), worthy almost €51bn. (The EU already faces 25% US import tariffs connected its steel, aluminium and cars.)

The European craft sector, including Airbus, is besides expected to travel into nan crosshairs of nan US. Previously, nan EU put Boeing connected its projected database of US products worthy €95bn that could beryllium deed pinch EU counter-tariffs successful lawsuit of nary deal. 

In total, nan EU GDP could beryllium deed by 0.5%, according to Maria Demertzis, nan caput of nan system strategy centre astatine nan Conference Board think-tank successful Brussels, cited by nan FT.

She based her forecast connected a erstwhile study by nan European Commission that counted connected 20% tariffs lowering EU GDP by astir 0.2% annually, driven chiefly by weaker exports. 

Which EU countries are nan astir impacted by US waste and acquisition tariffs?

The EU countries that export nan astir to nan US, truthful nan astir susceptible to specified tariff hikes, see Germany, Ireland, Italy and France. 

Germany was nan largest exporter of equipment to nan United States successful 2024, owed to nan precocious measurement of conveyance exports and pharmaceutical products.

Ireland is chiefly exposed done its pharma sector, arsenic galore specified companies person factories successful Ireland wherever taxes are low. Italy is besides among nan susceptible personnel states, pinch precocious vulnerability successful carrier equipment, car manufacturing, manner and pharmaceuticals.

Analysts expect volatility successful nan markets successful nan small much than 1 period near for nan negotiations to yield. Previously, nan EU showed signs that nan existent 10% is perchance going to stay. “It is clear from our discussions pinch nan Commission that it will beryllium difficult to spell beneath 10% US tariffs,” a European diplomat told Euronews past week earlier nan US President’s latest threat.

Meanwhile, nan European Trade Commissioner Maroš Šefčovič was owed to speak pinch his US counterparts connected Monday afternoon.