New round of US tariffs a ‘modest’ hit for euro area: ECB

Sign of the European central Bank (ECB) is seen ahead of the news conference on the outcome of the Governing Council meeting, outside the ECB headquarters in Frankfurt, Germany, 7 March – Reuters

FRANKFURT (Reuters): A new round of tariffs between the United States and its main partners would only cause a “modest decrease” in the pace of economic growth in the euro zone, according to research by the European Central Bank. The study simulated a two-way, 10% increase in tariff and other trade barriers between the world’s largest economy and all its partners.

It showed an “overall modest decrease in activity” in the euro area due to fading global confidence outweighing a boost to EU exports to countries other than the United States.

The study also showed a decrease of fewer than 10 basis points in the real income of German households from tariffs on the automotive sector even after taking into account cross-country production linkages, known as global value chains (GVC) in economic parlance.