Equity Research

TRADE POLICY IN FOCUS

The EU-US Trade Deal: A Smaller Increase in the Effective Tariff Rate Than in Our Baseline; Raising our Growth Projections

We estimate that the effective tariff rate on EU exports into the US increases from around 10% currently to about 16% with the deal, somewhat below our previous assumption. We thus revise down our estimate of the Euro area real GDP hit from trade-related tensions to -0.4% (from -0.6% previously). As a result of the deal and the better-than-expected activity dataflow, we raise our growth forecast for 2025 Q3 by 0.1pp, for 2025 Q4 by 0.2pp, and for Q1 2026 by 0.1pp, on a rounded basis. This raises our annual average growth forecast for 2025 and 2026 by 0.1pp each to 1.1% and 1.2%, respectively.

28 Jul 2025 | Research | Economics - Sven Jari Stehn and others

USA: US and EU Announce Trade Deal, Reducing Risks Ahead of Aug. 1 Deadline

The US and EU announced the outline of a trade agreement, setting the US tariff on most EU products at 15% (including autos, pharma and semis) and eliminating EU tariffs on US products. We have already assumed a general 15% tariff rate for the EU and other US trading partners in our baseline, but the 10pp reduction in the sectoral tariffs would reduce the ultimate US effective tariff rate by 0.7pp vs. our assumptions.

28 Jul 2025 | Research | Economics - Jan Hatzius and others

Also see:
GOAL Kickstart: Goldilocks extends with further declines in trade policy uncertainty (28 Jul 2025)
Copper: Minerals Diplomacy Implies Downside Risk To S232 Tariff Pricing (28 Jul 2025)
Japan: Revising up TOPIX Target to 3,200 after US-Japan trade deal; TPX hits an all-time-high (28 Jul 2025)
Global FX Trader: Deals Don't Derail Dollar Downside (25 Jul 2025)

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