The EU, China and the US will suffer economically from the re-emergence of protectionism
The world’s largest economies, particularly the EU, China, the US, Mexico and Canada are all projected to suffer economically from the re-emergence of economic protectionism and a significant increase in trade tariffs.
In the case of the EU, the block would experience a 1% contraction in GDP, a 0.3% lower rate of employment, and a 1.1% decrease in imports by 2030, compared to a ‘no new tariffs’ baseline scenario.
China is expected to suffer a larger negative impact on GDP in the short term, but in the longer term the analysis suggests that China will be able to redirect exports to other markets, including the EU, and redirect its sourcing of imports to Asian countries at modest additional cost.
Hence, the EU suffers an indirect impact of US tariffs on China.
The analysis is based on a global macro-economic model run by Cambridge Econometrics and Eurofound’s European Jobs Monitor.
It is detailed in the Trade scenario: Employment implications in Europe of a large increase in global tariffs report from the Future of Manufacturing in Europe (FOME) project.
Future of manufacturing in Europe (FOME) is an EU project proposed by the European Parliament and delegated to Eurofound by the European Commission.
Please see here for the Eurofound press release.
For the full report, please see Trade scenario: Employment implications in Europe of a large increase in global tariffs.