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Which European economy stands to suffer the most from US tariffs?

Yahoo

17 minutes ago

Yahoo

Which European economy stands to suffer the most from US tariffs?

Germany and Ireland are standing out as the two most exposed EU economies threatened by higher US tariffs, as Brussels works towards a trade deal with Washington, amid reports that pharmaceutical tariffs could be as high as 200%. When US President Donald Trump imposed a new 25% tariff on auto imports and car parts in April, Germany was identified as the EU country with the most to lose. Brussels-based think tank Bruegel's estimation at the time was that tariffs could cost 0.4% of the country's GDP in the long term. While awaiting a new EU-US trade deal, other details emerge that could put Ireland, Denmark, and Belgium, as well as other countries, in the crosshairs should Washington target the pharmaceutical sector next. The overall impact on the European economy will depend on the actual tariff rate the US settles on and the EU's response, but the blow will not be spread evenly. According to Bruegel, the EU economy is facing significant but manageable macroeconomic consequences. They estimated in a report in April that, regarding the possible scenarios, the damage could be approximately 0.3% of the EU's GDP, depending on the outcome of the negotiations. This compares to the 1.1% real GDP growth expected in the bloc in 2025, by the European Commission's Spring Forecast. Trade with the US is significant. In 2024, the United States was the largest partner for EU exports of goods, making up 20.6% of all EU goods exports outside the bloc. Pharmaceuticals account for 15% of the EU's goods exports to the US. They are followed by the auto sector. Until there is more clarification on potential US tariffs on the pharma sector's products, 'the auto sector seems to be the most vulnerable to US tariffs as there doesn't seem to be any major exemptions planned,' said Savary. The industry has been slapped with a 25% tariff in April. 'Tariffs alone could shave around 8% off total EU trade volumes over the next five years,' said Rory Fennessy, Senior Economist at Oxford Economics, in a recent report. Countries with the highest value in goods exports to the US, facing the biggest threat to their economies, include Germany, Ireland, Italy, France and the Netherlands. The German economy relies heavily on exports, boosted by the country's motor vehicle sector. Nearly one-quarter (22.7%) of the total German exports are heading to the US. 'Germany stands out as the major European economy likely to be hit hardest by US tariffs, and we expect GDP growth to slump in the second and third quarters," Andrew Hunter, Associate Director and Senior Economist at Moody's Ratings, said to Euronews Business. Hunter also added that smaller economies, including Austria and others in central and eastern Europe, 'which are heavily integrated into Germany's industrial supply chains, will also be hit hard'. According to Bruegel, after 2025, the long-term negative impact of the tariffs could be around 0.4% of the GDP in Germany, once 'the effect has fully built up and initial short-term effects dissipated,' said Niclas Frederic Poitiers, Research Fellow at Bruegel. 'For France, the average effect would be around 0.25% of GDP.' Related Lengthy trade wars could cut global investment by one-tenth, warn economists Trump the unifier? How Europe could benefit from Trump's policies Uncertainty could lead to lost investments and jobs across the entire 27-member bloc. Hunter said that, 'even for those countries where direct exposure to US exports is relatively limited, such as France or Spain, growth is still likely to be weighed down by global weakness and uncertainty. Regarding long-term impacts, Ireland stands out as one of the most affected countries, as more than half of its goods exports (53.7%) are directed towards the US market. A lot depends on whether the pharmaceutical sector will be hit with tariffs. If so, 'Ireland will be the EU economy most at risk from these tariffs,' said Mathieu Savary, chief strategist for our European Investment Strategy at BCA Research. The research-based pharmaceutical industry is a key asset of the European economy. It is one of Europe's top-performing high-technology sectors. It contributed €311 billion in gross value added (GVA) and 2.3 million jobs directly and indirectly to the European Union's economy in 2022, according to a recent study by PWC. And the US market is crucial to the European pharma sector. According to the European Federation of Pharmaceutical Industries and Associations, in 2021, North America accounted for 49.1% of world pharmaceutical sales compared with 23.4% for Europe. And more than one-third of EU pharma exports are going to the US. If the pharma sector is hit by a 25% tariff, as it is expected by Moody's in the coming months, 'most exposed would be a number of smaller European economies like Denmark, Belgium, Slovenia and Ireland, which are generally where we think the risks of recession in Europe are highest,' Hunter said. BCA Research's chief strategist added that in this case, 'Ireland is particularly exposed to this risk,' citing that exports to the US represent 18% of Ireland's GDP, and pharma exports represent nearly 55% of Irish exports. According to BCA, the impact 'could curtail 4% to 5% to growth over time'. Bruegel estimated that Ireland's cumulative real GDP loss could be 3% by 2028. The think tank also singled out the country as the most vulnerable regarding the impact of the US tariffs on employment. Regarding how vulnerable a country is to job losses in light of US tariffs, Bruegel said that Italy was the second most-exposed country, with a high exposure in transport equipment and a high level of exposed employment in fashion and car manufacturing. Italy would also have high exposure in pharmaceuticals. Trump said on Tuesday that pharmaceutical products imported to the US are facing a 200% tariff, without disclosing any further details. According to BCA's Savary, it is not likely, because 'that would massively increase the cost of healthcare for US consumers, which is already a major issue for voters.' He sees it as a 'strong message to foreign pharma companies to adjust their pricing down and invest into producing their drugs in the US.' Savary expects 'that FDIs into the US and drug prices reduction announcements will be the end result of these talks and threats'. 'The pressure is now on for drug companies to expand US production facilities so they are effectively on the doorstep of American customers,' said Dan Coatsworth, investment analyst at AJ Bell.

San Francisco Chronicle

20 minutes ago

San Francisco Chronicle

DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own

HARRISBURG, Pa. (AP) — The brash and chaotic first days of President Donald Trump 's Department of Government Efficiency, once led by the world's richest man Elon Musk, spawned state-level DOGE mimicry as Republican governors and lawmakers aim to show they are in step with their party's leader. Governors have always made political hay out of slashing waste or taming bureaucracy, but DOGE has, in some ways, raised the stakes for them to show that they are zealously committed to cutting costs. Many drive home the point that they have always been focused on cutting government, even if they're not conducting mass layoffs. 'I like to say we were doing DOGE before DOGE was a thing,' Iowa Gov. Kim Reynolds said in announcing her own task force in January. Critics agree that some of these initiatives are nothing new and suggest they are wasteful, essentially duplicating built-in processes that are normally the domain of legislative committees or independent state auditors. At the same time, some governors are using their DOGE vehicles to take aim at GOP targets of the moment, such as welfare programs or diversity, equity and inclusion programs. And some governors who might be eyeing a White House run in 2028 are rebranding their cost-cutting initiatives as DOGE, perhaps eager to claim the mantle of the most DOGE of them all. No chainsaws in the states At least 26 states have initiated DOGE-style efforts of varying kinds, according to the Economic Policy Institute based in Washington, D.C. Most DOGE efforts were carried out through a governor's order — including by governors in Florida, Iowa, Louisiana, Montana, New Hampshire and Oklahoma — or by lawmakers introducing legislation or creating a legislative committee. The state initiatives have a markedly different character than Trump's slash-and-burn approach, symbolized by Musk's chainsaw-brandishing appearance at a Conservative Political Action Committee appearance in February. Governors are tending to entrust their DOGE bureaus to loyalists, rather than independent auditors, and are often employing what could be yearslong processes to consolidate procurement, modernize information technology systems, introduce AI tools, repeal regulations or reduce car fleets, office leases or worker headcounts through attrition. Steve Slivinski, a senior fellow at the libertarian Cato Institute who researches state government regulatory structures, said that a lot of what he has seen from state-level DOGE initiatives are the 'same stuff you do on a pretty regular basis anyway' in state governments. States typically have routine auditing procedures and the ways states have of saving money are 'relatively unsexy," Slivinski said. And while the state-level DOGE vehicles might be useful over time in finding marginal improvements, "branding it DOGE is more of a press op rather than anything new or substantially different than what they usually do,' Slivinski said. Analysts at the pro-labor Economic Policy Institute say that governors and lawmakers, primarily in the South and Midwest, are using DOGE to breathe new life into long-term agendas to consolidate power away from state agencies and civil servants, dismantle public services and benefit insiders and privatization advocates. 'It's not actually about cutting costs because of some fiscal responsibility,' EPI analyst Nina Mast said. Governors promoting spending cuts Louisiana Gov. Jeff Landry rebranded his 'Fiscal Responsibility Program' as Louisiana DOGE, and promoted it as the first to team up with the federal government to scrub illegitimate enrollees from welfare programs. It has already netted $70 million in savings in the Medicaid program in an 'unprecedented' coordination, Landry said in June. In Oklahoma, Gov. Kevin Stitt — who says in a blurb on the Oklahoma DOGE website that 'I've been DOGE-ing in Oklahoma since before it was cool" — made a DOGE splash with the first report by his Division of Government Efficiency by declaring that the state would refuse some $157 million in federal public health grants. The biggest chunk of that was $132 million intended to support epidemiology and laboratory capacity to control infectious disease outbreaks. The Stitt administration said that funding — about one-third of the total over an eight-year period — exceeded the amount needed. The left-leaning Oklahoma Policy Institute questioned the wisdom of that, pointing to rising numbers of measles and whooping cough cases and the rocky transition under Stitt of the state's public health lab from Oklahoma City to Stillwater. Oklahoma Democrats issued rebukes, citing Oklahoma's lousy public health rankings. 'This isn't leadership,' state Sen. Carri Hicks said. 'It's negligence." Stitt's Oklahoma DOGE has otherwise recommended changes in federal law to save money, opened up the suggestion box to state employees and members of the general public and posted a spreadsheet online with cost savings initiatives in his administration. Those include things as mundane as agencies going paperless, refinancing bonds, buying automated lawn mowers for the Capitol grounds or eliminating a fax machine line in the State Board of Licensure for Professional Engineers and Surveyors. Florida Gov. Ron DeSantis signed an executive order in February creating a task force of DOGE teams in each state agency. In the order, DeSantis recited 10 points on what he described as his and Florida's 'history of prudent fiscal management' even before DOGE. Among other things, DeSantis vowed to scrutinize spending by state universities and municipal and county governments — including on DEI initiatives — at a time when DeSantis is pushing to abolish the property taxes that predominantly fund local governments. His administration has since issued letters to universities and governments requesting reams of information and received a blessing from lawmakers, who passed legislation authorizing the inquiry and imposing fines for entities that don't respond. After the June 30 signing ceremony, DeSantis declared on social media: 'We now have full authority to DOGE local governments.' In Arkansas, Gov. Sarah Huckabee Sanders launched her cost-cutting Arkansas Forward last year, before DOGE, and later said the state had done the 'same thing' as DOGE. Her administration spent much of 2024 compiling a 97-page report that listed hundreds of ways to possibly save $300 million inside a $6.5 billion budget. Achieving that savings — largely by standardizing information technology and purchasing — would sometimes require up-front spending and take years to realize savings.

Yahoo

20 minutes ago

Yahoo

DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own

HARRISBURG, Pa. (AP) — The brash and chaotic first days of President Donald Trump 's Department of Government Efficiency, once led by the world's richest man Elon Musk, spawned state-level DOGE mimicry as Republican governors and lawmakers aim to show they are in step with their party's leader. Governors have always made political hay out of slashing waste or taming bureaucracy, but DOGE has, in some ways, raised the stakes for them to show that they are zealously committed to cutting costs. Many drive home the point that they have always been focused on cutting government, even if they're not conducting mass layoffs. 'I like to say we were doing DOGE before DOGE was a thing,' Iowa Gov. Kim Reynolds said in announcing her own task force in January. Critics agree that some of these initiatives are nothing new and suggest they are wasteful, essentially duplicating built-in processes that are normally the domain of legislative committees or independent state auditors. At the same time, some governors are using their DOGE vehicles to take aim at GOP targets of the moment, such as welfare programs or diversity, equity and inclusion programs. And some governors who might be eyeing a White House run in 2028 are rebranding their cost-cutting initiatives as DOGE, perhaps eager to claim the mantle of the most DOGE of them all. No chainsaws in the states At least 26 states have initiated DOGE-style efforts of varying kinds, according to the Economic Policy Institute based in Washington, D.C. Most DOGE efforts were carried out through a governor's order — including by governors in Florida, Iowa, Louisiana, Montana, New Hampshire and Oklahoma — or by lawmakers introducing legislation or creating a legislative committee. The state initiatives have a markedly different character than Trump's slash-and-burn approach, symbolized by Musk's chainsaw-brandishing appearance at a Conservative Political Action Committee appearance in February. Governors are tending to entrust their DOGE bureaus to loyalists, rather than independent auditors, and are often employing what could be yearslong processes to consolidate procurement, modernize information technology systems, introduce AI tools, repeal regulations or reduce car fleets, office leases or worker headcounts through attrition. Steve Slivinski, a senior fellow at the libertarian Cato Institute who researches state government regulatory structures, said that a lot of what he has seen from state-level DOGE initiatives are the 'same stuff you do on a pretty regular basis anyway' in state governments. States typically have routine auditing procedures and the ways states have of saving money are 'relatively unsexy," Slivinski said. And while the state-level DOGE vehicles might be useful over time in finding marginal improvements, "branding it DOGE is more of a press op rather than anything new or substantially different than what they usually do,' Slivinski said. Analysts at the pro-labor Economic Policy Institute say that governors and lawmakers, primarily in the South and Midwest, are using DOGE to breathe new life into long-term agendas to consolidate power away from state agencies and civil servants, dismantle public services and benefit insiders and privatization advocates. 'It's not actually about cutting costs because of some fiscal responsibility,' EPI analyst Nina Mast said. Governors promoting spending cuts Louisiana Gov. Jeff Landry rebranded his 'Fiscal Responsibility Program' as Louisiana DOGE, and promoted it as the first to team up with the federal government to scrub illegitimate enrollees from welfare programs. It has already netted $70 million in savings in the Medicaid program in an 'unprecedented' coordination, Landry said in June. In Oklahoma, Gov. Kevin Stitt — who says in a blurb on the Oklahoma DOGE website that 'I've been DOGE-ing in Oklahoma since before it was cool" — made a DOGE splash with the first report by his Division of Government Efficiency by declaring that the state would refuse some $157 million in federal public health grants. The biggest chunk of that was $132 million intended to support epidemiology and laboratory capacity to control infectious disease outbreaks. The Stitt administration said that funding — about one-third of the total over an eight-year period — exceeded the amount needed. The left-leaning Oklahoma Policy Institute questioned the wisdom of that, pointing to rising numbers of measles and whooping cough cases and the rocky transition under Stitt of the state's public health lab from Oklahoma City to Stillwater. Oklahoma Democrats issued rebukes, citing Oklahoma's lousy public health rankings. 'This isn't leadership,' state Sen. Carri Hicks said. 'It's negligence." Stitt's Oklahoma DOGE has otherwise recommended changes in federal law to save money, opened up the suggestion box to state employees and members of the general public and posted a spreadsheet online with cost savings initiatives in his administration. Those include things as mundane as agencies going paperless, refinancing bonds, buying automated lawn mowers for the Capitol grounds or eliminating a fax machine line in the State Board of Licensure for Professional Engineers and Surveyors. Florida Gov. Ron DeSantis signed an executive order in February creating a task force of DOGE teams in each state agency. In the order, DeSantis recited 10 points on what he described as his and Florida's 'history of prudent fiscal management' even before DOGE. Among other things, DeSantis vowed to scrutinize spending by state universities and municipal and county governments — including on DEI initiatives — at a time when DeSantis is pushing to abolish the property taxes that predominantly fund local governments. His administration has since issued letters to universities and governments requesting reams of information and received a blessing from lawmakers, who passed legislation authorizing the inquiry and imposing fines for entities that don't respond. After the June 30 signing ceremony, DeSantis declared on social media: 'We now have full authority to DOGE local governments.' In Arkansas, Gov. Sarah Huckabee Sanders launched her cost-cutting Arkansas Forward last year, before DOGE, and later said the state had done the 'same thing' as DOGE. Her administration spent much of 2024 compiling a 97-page report that listed hundreds of ways to possibly save $300 million inside a $6.5 billion budget. Achieving that savings — largely by standardizing information technology and purchasing — would sometimes require up-front spending and take years to realize savings. ___ Follow Marc Levy on X at: Marc Levy, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Trump has big plans for Fourth of July 2026. What we know about America's 250th.

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Which European economy stands to suffer the most from US tariffs?

DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own

DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own

Trump has big plans for Fourth of July 2026. What we know about America's 250th.

Hashtags

Try Our AI Features

Comments

Related Articles

Which European economy stands to suffer the most from US tariffs?

DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own

DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own

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