PremiumHow Trump's Greenland Tariffs Would Impact European Economies
Over the weekend, president Trump announced that the US will impose a 10% tariff on imports from eight European countries (Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland) from February 1. (One assumes this tariff would apply over and above any current tariffs.)
While implementation is highly uncertain - and according to Deutsche Bank, Europe could liquidate some of its record holdings of US assets as a deterrent to actual implementation - Goldman estimates that a 10% tariff would lower real GDP in the affected European countries by 0.1-0.2% via lower exports. At the same time, inflation effects would likely be very small and a Taylor rule would point to modestly lower policy rates, all else equal.