The European Commission has downgraded its 2025 eurozone growth forecast to 0.9%, a sharp reduction from November's 1.3% projection, as global trade tensions triggered by U.S. tariffs disrupt economic momentum. The revised outlook comes amid escalating protectionist measures, with EU Economy Chief Valdis Dombrovskis warning of "downside risks" requiring decisive action.
Germany, Europe's industrial powerhouse, faces particular strain with zero growth predicted for 2025 – a dramatic reversal from last year's 0.7% forecast. The commission attributes the slowdown to weakening global trade and policy uncertainty following President Trump's 20-25% tariffs on EU steel, aluminum, and auto imports.
Competitiveness Takes Center Stage
With temporary tariff suspensions set to expire in July, Brussels is shifting strategy from climate-focused policies to enhancing business competitiveness. "We must boost our economic resilience against international headwinds," Dombrovskis stated, referencing challenges from both U.S. trade measures and global market competition.
The revised forecasts show 2026 growth expectations trimmed to 1.4%, while analysts note the EU's 10% baseline tariff on imports compounds pressure on manufacturers. Wage growth and employment stability currently prevent steeper declines, but officials emphasize the need for structural reforms.
