TechFlow news, April 9 — According to Jinshi Data, four sources said the impact of U.S. trade tariffs on eurozone economic growth could be far greater than the European Central Bank's initial estimates, and the turmoil could also drag inflation lower in the short term. This might push the eurozone economy into stagnation and dash hopes for recovery. Until recently, the eurozone economy had been growing, supported by large-scale public investment programs.
Last month, the ECB predicted that the trade war would reduce eurozone economic growth by 0.5 percentage points in the first year, and prices would temporarily rise by a similar amount if the EU retaliates.
However, sources said the actual tariffs announced by Trump are more damaging than modeled, and ECB staff have been asked to produce new figures for policymakers to discuss at their meeting on April 17. Informal discussions among decision-makers could begin as early as this week. All agree that the 0.5 percentage point estimate is now too low, with one source saying the impact could exceed 1 percentage point. This would essentially erase all economic growth, as the eurozone's expansion this year is expected to be around just 1%.
