Trade Turmoil: Trump's Tariffs Threaten Eurozone Growth

Greek central bank governor Yannis Stournaras warns that U.S. President Trump's tariffs could hamper eurozone economic growth by up to 1 percentage point. The European Union considers retaliatory measures on U.S. imports, while the European Central Bank predicts a deflationary effect and increased global policy uncertainty.

U.S. President Donald Trump's tariff policies may impede eurozone economic growth by up to 1 percent, Greek central bank governor Yannis Stournaras has cautioned. His statements come as the European Union deliberates retaliatory actions on U.S. imports worth $28 billion, ranging from dental floss to diamonds.

Facing imposed U.S. tariffs of 25% on steel, aluminum, and vehicles, alongside a 20% levy on most other goods, the 27-nation EU bloc is strategizing countermeasures for introduction on Wednesday. Stournaras highlights the risk of a significant "negative demand shock" in the Eurozone, potentially stifling economic activity and dropping inflation rates beneath targets.

The European Central Bank projects that a comprehensive 25% U.S. tariff on European imports could slice eurozone growth by 0.3 points initially. EU retaliatory tariffs might elevate the impact to half a percentage point. As Stournaras deems these U.S. measures more severe than anticipated, he notes their deflationary impact and a rise in global policy uncertainty. The FT underscores the broad scope of Trump's tariffs, which affect roughly 60 countries and primarily target U.S. imports totaling billions of euros in trade.

(With inputs from agencies.)