ECB Economists Highlight Impact of U.S. Tariffs on Eurozone Growth

European Central Bank (ECB) economists have expressed concerns over the impact of import tariffs on European goods, such as those imposed by the United States, on the Eurozone's economic growth and inflation. According to Jin10, these economists argue that while tariffs can weaken growth and reduce inflation, the industries affected are highly sensitive to interest rate changes. As a result, they suggest that accommodative monetary policy could counteract deflationary pressures and support economic activity. The economists noted that approximately a year and a half after a tariff shock reduces Eurozone exports to the U.S. by 1%, consumer price inflation could decrease by about 0.1%. They observed that in the industrial sector, output tends to decline sharply following tariff increases. However, easing monetary policy can lead to a robust expansion of economic activity. "This indicates that monetary policy remains a powerful tool to address deflation caused by tariffs and to buffer the drag from higher trade barriers," the economists stated.