European Central Bank board member Piero Cipollone said that the import tariffs announced by Donald Trump could reduce GDP growth and inflation in the eurozone.
While many economists believe that new US tariffs will make imports of key goods more expensive, along with rising costs due to likely retaliatory measures from the EU, Cipollone suggested that "we will have a reduction in growth but also a reduction in inflation". He added that the US tariffs would weaken the economy, which would lead to a reduction in consumption and thus reduce pressure on prices, while Chinese manufacturers, forced out of the US market, would sell their products in Europe at discounted prices.
In its latest forecasts, the European Commission reported that it projects real GDP growth in 2024 at 0.9% in the EU and 0.8% in the euro area. For the EU, this is 0,1% lower with respect to spring, while it is unchanged for the euro area. Growth in the EU is expected to pick up to 1.5% in 2025, as consumption is shifting up a gear and investment is set to rebound from the contraction of 2024. In 2026, economic activity is projected to expand by 1.8%, on the back of continued expansion of demand. Growth in the euro area is set to follow similar dynamics and attain 1.3% in 2025 and 1.6% in 2026. Meanwhile, headline inflation in the euro area is set to more than halve in 2024, from 5.4% in 2023 to 2.4%, before easing more gradually to 2.1% in 2025 and 1.9% in 2026. In the EU, the inflation process is set to be even sharper in 2024, with headline inflation falling to 2.6%, from 6.4% in 2023, and to continue easing to 2.4% in 2025 and 2.0% in 2026.