US tariffs likely to drag down European economy

Frankfurt: US President Donald Trump's tariff offensive has led European officials to cut their growth forecasts for this year and next - even in a best-case scenario in which the highest rates on most goods could be negotiated away.

The forecast for this year for the 20 countries that use the euro currency was cut to 0.9% from the previous forecast in November of 1.3%, the European Union's executive commission said Monday in its regular spring forecast.

The forecast for 2026 was cut to 1.4% from 1.6%.


One reason for the lower growth estimate was the stagnating economy in Germany, where growth is expected to be zero this year after two years of shrinking output.

Germany's economy is heavily dependent on exports but has faced strong headwinds from higher energy costs after the loss of Russian natural gas due to the invasion of Ukraine as well from lack of pro-growth infrastructure spending and competition from China in autos and industrial machinery.