EU-U.S. Trade Deal: Navigating Tariffs and Growth Challenges

The trade agreement between the U.S. and EU, while preventing a trade war, imposes tariffs around 15%, slightly above ECB's baseline projections. Though it avoids severe tariff impacts, it could still hinder economic growth. ECB President Lagarde suggests diversifying trade partners for sustained EU growth.

The recent trade deal between the United States and the European Union seems to align closely with the European Central Bank's baseline projections, according to ECB President Christine Lagarde. Yet, uncertainties cloud key sectors like pharmaceuticals and semiconductors.

Last month's agreement includes a 15% tariff on most goods, averting a full-blown trade war but potentially slowing down economic growth slightly. The effective average tariff for U.S. imports of euro area products ranges from 12% to 16%, explained Lagarde in Geneva.

Lagarde pointed out that while the U.S. remains a crucial partner, the EU should diversify its trade relations to sustain growth, especially amid evident slowdowns. She emphasized the importance of leveraging Europe's export-driven strengths for future economic stability.

(With inputs from agencies.)