Trump tariffs force EU to cut 2025 eurozone growth forecast

The European Union on Monday sharply cut its eurozone economic growth forecast for 2025 because of global trade tensions sparked by U.S. President Donald Trump's sweeping tariffs. 

The European Commission has revised down its economic forecast for the eurozone, projecting 0.9 percent growth in 2025, a notable decrease from the previously anticipated 1.3 percent. The revision is attributed to "a weakening global trade outlook and higher trade policy uncertainty."

The EU also lowered its prediction for eurozone growth in 2026 to 1.4 percent, down from 1.6 percent expected in November last year.

"Underpinned by a robust labor market and rising wages, growth is expected to continue in 2025, albeit at a moderate pace," EU economy chief Valdis Dombrovskis said.

Trump has hit the European Union and others with 25-percent levies on steel, aluminum and auto imports, and the bloc faces sweeping additional tariffs unless it reaches a deal with Washington.

The U.S. leader announced a 20-percent levy on most EU goods in April, along with higher duties on dozens of other nations.

That measure has since been frozen until July to allow negotiations, but Trump has kept a "baseline" 10-percent tariff on imports from around the world, including the 27-country EU.

Notably, Germany, the EU's largest economy, is expected to experience zero growth in 2025. This marks a significant downgrade from the 0.7 percent growth forecast issued last year, highlighting the bloc's growing economic vulnerability amid international headwinds.

"The risks to the outlook remain tilted to the downside, so the EU must take decisive action to boost our competitiveness," Dombrovskis said.

After a previous mandate focused on fighting climate change, the commission's focus has pivoted to competitiveness, seeking to make life for businesses easier in the face of fierce competition from Chinese and American firms.

(Cover: A pedestrian walks past the Berlaymont building, the seat of the European Commission, in Brussels, Belgium, April 2, 2025. /VCG)