Bloomberg: EU could suffer $2 trillion hit in US–China Taiwan conflict

The European Union’s economy could face losses of around $2 trillion in the event of a military conflict between the United States and China over Taiwan, according to analysis by Bloomberg.

The study, cited by the agency, suggests that several major EU economies would be among the hardest hit globally.

Germany, Italy, Spain and France all feature in the top ten countries expected to suffer the most severe economic damage under a hypothetical escalation scenario.

Germany alone could see its economy contract by nearly 14% of GDP in the first year of a conflict, roughly double the projected impact on the United States, estimated at 7.3%.

Bloomberg said the findings highlight structural vulnerabilities in Europe’s exposure to global supply chains and geopolitical shocks. “The US may set the tone in global affairs, but Europe often pays a higher price,” the agency noted, referencing lessons drawn from previous US foreign policy crises.

According to Bloomberg sources, European governments are not currently prepared for the speed of response such a scenario would require. In the event of rapid escalation, EU decision-making could be forced into a matter of hours, while current mechanisms are not considered sufficiently agile.

Officials and analysts cited in the report also pointed to long-standing assumptions in Europe that it could rely on the United States to lead responses in major crises. However, that assumption is said to be shifting following the return of US President Donald Trump to the White House.

Globally, Bloomberg estimates that a full-scale US–China conflict could reduce world output by around 8%, exceeding the economic impact of both the 2008–2009 financial crisis and the Covid-19 pandemic.

By Aghakazim Guliyev