The European Union has significantly lowered its economic growth forecast for the eurozone in 2025, citing escalating global trade tensions sparked by U.S. President Donald Trump’s sweeping tariffs.
The European Commission now projects a growth rate of 0.9 percent for the eurozone in 2025, a notable drop from the previously anticipated 1.3 percent. This downward revision is attributed to “a weakening global trade outlook and higher trade policy uncertainty.”
Looking ahead to 2026, the EU also reduced its growth prediction to 1.4 percent, down from 1.6 percent expected last November.
“Underpinned by a robust labor market and rising wages, growth is expected to continue in 2025, albeit at a moderate pace,” said Valdis Dombrovskis, the EU’s economy chief. “The risks to the outlook remain tilted to the downside, so the EU must take decisive action to boost our competitiveness.“
Since taking office, President Trump has imposed 25-percent tariffs on steel, aluminum, and auto imports from the EU and other nations. In April, he announced an additional 20-percent levy on most EU goods, alongside higher duties on products from dozens of other countries. While this measure has been temporarily frozen until July to allow for negotiations, a baseline 10-percent tariff remains in place on imports from around the world, including the 27 EU member states.
The impact of these trade tensions is being felt acutely in Germany, the EU’s largest economy. Germany is now expected to experience zero growth in 2025—a substantial downgrade from the 0.7 percent growth forecast issued last year. This highlights the bloc’s increasing economic vulnerability amid international headwinds.
In response to these challenges, the European Commission has shifted its focus towards enhancing competitiveness. Moving away from its previous mandate centered on fighting climate change, the commission aims to make life easier for businesses facing fierce competition from Chinese and American firms.
