Europe’s economy showed signs of improvement in early 2025, but hopes for a sustained rebound are fading quickly due to aggressive new U.S. trade measures. The eurozone posted 0.4 percent growth in the first quarter, doubling its previous quarter’s pace, according to data released Wednesday. However, that optimism has been dampened by sweeping tariffs introduced by U.S. President Donald Trump.
Just two days after the quarter ended, Trump unveiled a broad set of tariffs targeting nearly every U.S. trade partner. A 20 percent duty on European Union imports, including cars and pharmaceuticals, has raised alarm among analysts and business leaders. Given Europe’s reliance on exports, especially to the U.S., the move has already led to downgraded growth forecasts.
Trump has offered a 90-day pause on what he calls “reciprocal” tariffs, but there is little clarity on whether negotiations will ease the pressure. Other levies, including 25 percent tariffs on steel, aluminum, and cars, remain firmly in place.
As a result, economic sentiment in the eurozone has dropped sharply. The European Commission’s indicator fell to 93.6 in March, its lowest since 2023. Economists warn that unless trade tensions ease soon, Europe’s recovery could stall just as it gains traction.
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