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By Opalesque: Despite the significant threat of tariffs, Europe has shown surprising economic resilience. Structural forces, including monetary and fiscal support, have overcome cyclical headwinds for now, reports Gautam Soundararajan, research analyst at BrandyWine Global, a US-based asset manager owned by Franklin Templeton.
Trade and tariff challenges
The eurozone faces significant headwinds from US tariffs, with growth forecasts initially revised down to 0.8% for 2025 following Trump's second-term policies. However, trade deal negotiations have reduced uncertainty. The emerging agreement includes a 15% baseline tariff on most EU goods entering the US, with higher rates on steel and aluminium, while tariffs on autos, pharmaceuticals, and semiconductors remain under review. In exchange, the EU committed to purchasing $750bn (US$872bn) in US energy over three years, investing $600bn in US capital projects, and procuring substantial military equipment.
The energy purchase commitment presents practical challenges, as the EU imported only €465bn in total energy from non-EU countries in 2024, with the US supplying €77bn. Meeting these targets would require dramatically reshaping Europe's energy consumption patterns or trade relationships.
Despite these challenges, the eurozone has shown unexpected resilience. The manufacturing Purchasing Managers' Index (PMI) reached three-year highs, and growth forecasts have recovered to 1.1% for...................... To view our full article Click here
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