A recent Financial Times poll of 72 economists highlights that the greatest risks to the eurozone economy in 2025 are a potential global trade war and political inactivity within the region. Concerns were raised particularly around the implications of U.S. President-elect Donald Trump’s proposed tariff increases, which could see tariffs on all imports rise by 20%, and a staggering 60% on China. Such measures could mark a significant shift toward U.S. protectionism, reminiscent of the Great Depression, and could trigger retaliation from affected countries.
The eurozone, with its substantial trade surplus with the U.S., is particularly vulnerable to these proposed tariffs. Economists warn that this situation could compel China to flood the global market with low-cost products as a countermeasure. Mujtaba Rahman, from Eurasia Group, characterized a second Trump presidency as a major political and economic risk for Europe, potentially pressuring the region to adopt similar tariffs and take a tougher stance against China.
The survey indicated that nearly 69% of economists anticipate trade tensions resulting from U.S. tariffs, which they predict will significantly threaten eurozone growth. Most respondents expect euro area growth to be only 0.9%, marking a third consecutive year of below-average economic expansion.
While the majority of economists believe that a recession can be avoided, there are dissenting opinions. John Llewellyn, a former OECD economist, predicts that the eurozone economy could contract. On a more optimistic note, many respondents express support for engaging in trade negotiations with the U.S. to avert a full-blown trade war, arguing that the EU’s strong position as a major trading bloc provides leverage.
Moreover, there are significant worries about Europe’s internal political challenges, with some economists likening the situation to historical periods of decline. A fraction of analysts remains hopeful that a change in Germany’s political landscape could stimulate necessary reforms. Nonetheless, divisions within potential coalition governments and a lack of urgency in response to a changing global environment make the future uncertain.
Overall, while the potential for lower interest rates and rising consumer demand offer some glimmers of hope, many economists caution that complacency could hinder Europe from effectively addressing its vulnerabilities in the face of an increasingly hostile international landscape.