FRANKFURT (Reuters) – A new round of tariffs between the United States and its main partners would only cause a “modest decrease” in the pace of economic growth in the euro zone, according to research by the European Central Bank.
The study simulated a two-way, 10 percent increase in tariff and other trade barriers between the world’s largest economy and all its partners.
It showed an “overall modest decrease in activity” in the euro area due to fading global confidence outweighing a boost to EU exports to countries other than the United States.
GRAPHIC: Welfare effect of car tariffs – https://tmsnrt.rs/2XDbyvj
The study also showed a decrease of fewer than 10 basis points in the real income of German households from tariffs on the automotive sector even after taking into account cross-country production linkages, known as global value chains (GVC) in economic parlance.
GRAPHIC: Estimated impact of an escalation in trade tension – https://tmsnrt.rs/2W1TJpp
To read the study, which builds on ECB research from last year, please click:
(Reporting By Francesco Canepa; Editing by Angus MacSwan)