Trade Tariffs to Impact US GDP Significantly by 2027

European Trade Commissioner Valdis Dombrovskis revealed on Friday that recent projections indicate a potential decrease in the United States' gross domestic product (GDP) by 0.8% to 1.4% by 2027, attributing this downturn to the effects of trade tariffs. The European Union's GDP is also expected to see a slight reduction of 0.2%.

Potential Escalation Could Worsen Economic Outlook

Should these trade measures become permanent or if the trade war intensifies, the EU forecasts more severe consequences: a 3.1% to 3.3% shrinkage in the US economy, a 0.5% to 0.6% decline in the Eurozone, and a 1.2% drop in the global economy within three years, alongside a 7.7% decrease in global trade.

Dombrovskis emphasized, "The models did not account for the potential loss of investor and business confidence in the US, which could further negatively impact these estimates." He reiterated the EU's stance, stating, "Europe did not initiate this confrontation nor desires it. Tariffs contradict the political and economic rationale behind our deep, long-standing transatlantic trading partnership, valued at €1.6 trillion in 2023."