Tariffs from abroad drag euro zone growth and prices, ECB economists say in World Economy News 11/02/2026 Foreign import tariffs imposed by other countries tend to lower euro area inflation and weaken economic growth, according to a new analysis by the European Central Bank. In a blog post published Tuesday, ECB economists found that when the United States imposes tariffs on European goods, the euro area experiences declining prices and weaker industrial activity over the medium term. The economists identified what they call “tariff-related trade surprises” (TTS) by analyzing unusual trade patterns linked to historical US tariff changes. Their research shows that immediately after a TTS, euro area prices slightly increase, consistent with higher production costs spreading through supply chains. However, over the medium term, prices begin to fall. About one and a half years after a TTS that cuts euro area exports to the United States by 1%, the consumer price level is approximately 0.1% lower. Euro area industrial production follows a similar pattern, declining over this period before stabilizing. The impact varies significantly across different sectors. “Downstream” sectors producing final goods such as machinery, automobiles, and pharmaceuticals typically see the peak impact one to two years after a TTS. When scaled to a 1% fall in bilateral exports, output in these sectors declines by about 0.3% on average, while producer prices fall by about 0.1% one year after the TTS. “Upstream” sectors that primarily produce intermediate inputs, like chemicals, can react on a different timeline since they operate at the beginning of the value chain and are more immediately affected by tariff changes. Importantly, the ECB economists found that monetary policy can help offset these effects. The sectors hit hardest by tariffs are also those that respond most strongly to interest rate changes, suggesting that monetary policy remains a powerful tool to counter tariff-induced disinflation and cushion the drag from higher trade barriers. This pattern holds for about 60% of the sectors studied, representing roughly 50% of total average euro area industrial output and goods exports to the United States. The economists concluded that the demand-reducing effects of US tariffs on the euro area outweigh any inflation-boosting supply effects, creating conditions similar to an adverse demand shock. Source: Investing.com 2026-02-11 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1', 'fbjssdk'); load('https://apis.google.com/js/plusone.js', 'gplus1js'); load('//platform.twitter.com/widgets.js', 'tweetjs'); } if (w.addEventListener) { w.addEventListener("load", go, false); } else if (w.attachEvent) { w.attachEvent("onload",go); } }(window, document, 'script')); tweet Share