Worse for the US would come from tit-for-tat tariffs by the EU, which would double the economic damage and push inflation up by 1.5 percentage points, the thinktank said.
It found that EU exports to the US would drop by between 15% and 17%, leading to “a significant” 0.4% contraction in the size of the EU economy, while American GDP would shrink by 0.17%.
The Kiel Institute said the US president’s promise on Wednesday that he would impose the levies “very soon” was a profound moment in the postwar relationship between Washington and Brussels and could prove to be an economic shock to both parties.
Hinz said he would be re-running the simulation exercise to take the new measures into account, but it was already clear that US consumers would be among the biggest losers.
Donald Trump’s threatened 25% tariffs on EU imports could trigger “economic turmoil”, sharply push down growth and send inflation soaring, according to a German thinktank.
