The latest 10% tariff threatened by President Donald Trump is likely to shave off about 0.1% from the euro area\u2019s gross domestic product, according to Goldman Sachs Group Inc. economists.<\/p>\n
Trump said on Saturday he would impose the levies on European countries that have rallied to support Greenland in the face of US threats to seize the semi-autonomous Danish territory. That would apply to Denmark, Norway, Sweden, France, Germany, Finland, the UK and the Netherlands.<\/p>\n
The Goldman team estimates that a 10% duty would lower real GDP by 0.1% to 0.2% across the affected countries via reduced trade. Germany would face the biggest hit at about 0.2% if it\u2019s an incremental reciprocal tariff and 0.3% if it\u2019s a blanket levy, they said.<\/p>\n
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\u201cThe hit could be larger should there be adverse confidence or financial market effects,\u201d the team including Sven Jari Stehn wrote in a note.<\/p>\n
Global financial markets have been roiled by the escalation in trade tensions, with European stocks and US index futures sliding and havens such as gold rallying on Monday. Still, a slate of strategists said the impact on European equities is likely to be short-lived as the economic outlook remains resilient.<\/p>\n
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The Goldman economists said while it was \u201chighly uncertain\u201d if the tariffs would be implemented, an EU response could range from stalling the US trade deal, imposing counter-levies or launching the so-called anti-coercion instrument. They expect the UK to focus on engaging diplomatically with Trump, similar to trade negotiations last year.<\/p>\n
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The EU is in talks to potentially impose tariffs on \u20ac93 billion ($108 billion) of US goods, and is also weighing additional countermeasures beyond the tariffs but will first try to find a diplomatic solution, according to people familiar with the discussions.<\/p>\n
The Goldman economists also see a \u201cvery small\u201d impact on inflation and they expect central banks would lower interest rates in response to the GDP outlook.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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