Influencing this decision has been the European credit agency Scope Ratings, which has published an extraordinary assessment. They show that the United States’ recently reached trade deal with the United States. The agency’s opinion-driven, forward-looking credit-risk evaluations create helpful context for understanding the possible ramifications should Congress change the trade policy course.
According to Arne Platteau, an analyst in credit policy at Scope Ratings, the elevated tariffs recently introduced by the United States would hurt some EU member states. He’s optimistic that growth in the euro area and EU will remain “robust.” In particular, he targets Spain’s output to fall by a modest 0.3 pps in the medium run. This drop is due directly to these tariffs. France is predicted to experience a lesser overall decline in output. The expected increase is only about half as large—0.2 percentage points over the same period.
In 2023, after the imposition of these tariffs, the overall effective US tariffs on EU exports increased by around 16 percentage points. This increase further adds to an already challenging environment for European exporters. This rise in tariffs, particularly with an assumed rate of 15% on EU exports destined for the US market, reflects ongoing tensions between global trading partners. The scenario outlined by Scope Ratings considers measures that have been either enacted or announced since the start of Donald Trump’s second administration.
The effects of these new, higher tariffs is starting to take an invisible toll—especially when one considers ambush that they are having on global value chains. And as companies try to adapt through these changes, they will incur added expenses and supply chain challenges that could make them less competitive. Due to the multifaceted nature of today’s trade dynamics, the impact goes beyond a simple productivity-costing tariff hike.
Scope Ratings points out that the worst-case scenario they modeled assumes that trading partners deploy counter-measures. These responses can add a layer of complexity to trade dynamics. They can radically alter the predicted economic effects on US and EU economies. The agency’s goal is to cut through the noise and confusion, enabling investors and policymakers alike to make more informed decisions.
Even in light of these hurdles, Scope Ratings is hopeful about the ongoing resilience of euro area and EU growth. Expected tariff impacts and careful trade think-tank pacts among the US and its industry partners establish an important harmony. Together this balance strikes a framework that fuels economic activity and prosperity.
As policymakers continue to react to these developments, it is ever more important to keep track of how these tariffs and countermeasures continue to develop. Domestic policies, international negotiations, and market dynamics are all closely linked. In combination with one another, they will both define and determine the trajectory of Europe’s economic landscape for years to come.