LIVE MARKETS-What if Europe ends up facing 30% tariffs?

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WHAT IF EUROPE ENDS UP FACING 30% TARIFFS?

Most analysts interpret U.S. President Donald Trump's announcement of a 30% tariff on the European Union as a negotiating tactic, maintaining their base case that the effective average duty will fall within the 10–15% range.

However, some economists have begun assessing the potential impact of a full 30% tariff, considering its broader implications for trade, inflation and financial markets.

"We think it may be more likely than not that the tariff on the EU increases from 10%, but short of 30%," according to Barclays economists who do not rule out the chance of a deal that maintains the average duty on most EU goods at 10%.

They also expect the European Union to retaliate in case of 30% trade duties from the U.S.

"Higher tariffs from August 1 would imply a deeper near-term contraction in economic activity and a more accommodative monetary policy stance with the deposit rate cut to 1% by the first quarter of 2026," they say.

The euro, which has been the top-performing currency against the dollar since Liberation Day, "could be faced with a less rosy environment should President Trump follow through on his 30% tariff threat."

"A full-blown trade war and deeper recession would likely send equities down double digits," they add.

(Stefano Rebaudo)

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