European Commissioner: EU tariffs imposed by US may shrink global GDP by 7%

European Commissioner for Economy Valdis Dombrovskis has said that the potential imposition of tariffs by the US on the EU may cause significant global economic fragmentation, with a projected 7 per cent reduction in global GDP in the medium term.

In an interview, Dombrovskis expressed regret over Washington's proposed tariffs, which he described as "unjustified", Caliber.Az reports per foreign media. 

He further explained that the move would not only harm the EU's economic growth but also negatively impact the US economy. 

"These tariffs would create significant challenges for economic growth on both sides of the Atlantic," said Dombrovskis. "There is a real risk of global economic fragmentation if these tariffs are enacted."

The commissioner emphasised that if global trade becomes concentrated within certain economic blocs due to the tariffs, the International Monetary Fund (IMF) estimates that global GDP could decrease by 7 per cent in the medium term. 

"This would be the equivalent of erasing the combined GDP of Germany and France from the global economy," Dombrovskis added, highlighting the substantial impact such fragmentation could have on the global economic landscape.

The potential imposition of tariffs by the US on the EU has been a point of contention in recent years, largely stemming from trade disputes between the two economic powers. These tensions have often been centred around issues such as subsidies to key industries (like aerospace, agriculture, and technology), trade imbalances, and disagreements over global trade practices.

By Naila Huseynova