Euro Area preps for Trump second term, tariff risks 

US tariffs may lower Euro Area GDP by 0.4%, the Institute of International Finance estimated

article-image

President Donald Trump | Anna Moneymaker/Shutterstock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


The transatlantic trade-dependent Euro Area is prepping for Donald Trump’s second term and the return of higher tariffs

US tariffs may lower Euro Area GDP by 0.4%, the Institute of International Finance (IIF) estimated in a Monday note. With many European countries yet to fully recover from the pandemic and increased competition from China, renewed tariffs could lead to a “substantial economic hit,” the report adds. 

Among the countries most likely to be impacted are Germany, France and Italy. Machinery and industrial goods exports from Italy and Germany are expected to be hit especially hard by new policies. Germany, the US’s largest exporter, also heads into its second straight year of zero growth. France could see exports of goods in the aerospace and luxury industries decline by as much as 4% over Trump’s next term, according to the IIF. 

But, as a new tariff scenario chart from Bloomberg Economics points out, Trump’s statements, which often shake global currencies, come much faster than the tariff policies themselves. Those could take weeks if not months, depending on how liberally Trump plans to take advantage of the International Emergency Economic Powers Act. 

Aside from timing, there’s also likely to be a discrepancy between Trump’s threats and what actually happens (during his first term, Trump walked back his initial proposed tariff on Mexico after the country agreed to increase border patrol). 

We’ll be watching as policies unfold, and as the next administration continues to tease its plans (I’d keep an eye on Truth Social).


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Robinhood announced that it’s building an L2 and also plans to launch staking for US users

article-image

“We’re not really doing anything controversial,” said co-founder Zak Folkman at Permissionless last week

article-image

Why equities are more stable than in past decades, plus advice from Peter Lynch

article-image

As Permissionless speakers talk on-chain RWA potential, tokenized stock platform Dinari secures FINRA broker-dealer approval

article-image

JavaScript fueled a toxic ad model for the internet, says Brendan Eich, but crypto and privacy tech could help us escape it

article-image

Stablecoin drivers, the SEC’s war on ETH, and how AI is driving crypto