BRUSSELS – The European Union has downgraded its economic growth forecasts amid fears of a global trade war.
In an update of its forecasts, the executive commission said Thursday that growth across the EU will increase at a 2.1 percent rate this year, down from its previous forecast a couple of months ago of 2.3 percent. It also reduced its forecast for the 19-country eurozone to 2.1 percent from 2.3 percent.
Pierre Moscovici, the commission’s top economy official, said the cuts reflect “the impact on confidence of trade tensions and policy uncertainty, as well as rising energy prices.”
Trade wars, he added, “produce no winners, only casualties.”
Fears of a global trade war have escalated this year as U.S. President Donald Trump backs a series of new tariffs, particularly against China.
The Trump administration just announced it’s readying tariffs on another $200 billion in Chinese imports, ranging from burglar alarms to mackerel, escalating a trade war between the world’s two biggest economies. On July 1o, the Office of the U.S. Trade Representative proposed 10 percent tariffs on a list of 6,031 Chinese products.
China, which officially responded Wednesday that it was “shocked” at the U.S. action, is expected to retaliate if the new tariffs take effect. The EU, Canada and Mexico have already launched their own countertariffs to U.S. levies against steel and aluminum imports, among others. And Mr. Trump is also weighing the possibility of adding autos and auto parts to his tariff list, putting the global auto industry on edge, including in the U.S.
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