Which European economy stands to suffer the most from US tariffs?

illuminem summarises for you the essential news of the day. Read the full piece on Euronews or enjoy below:

🗞️ Driving the news: Germany and Ireland have emerged as the European economies most at risk from escalating US tariffs on EU exports, particularly in the automotive and pharmaceutical sectors
• US President Donald Trump’s administration imposed a 25% tariff on European auto imports in April, disproportionately impacting Germany
• Meanwhile, looming tariffs on pharmaceutical products — reportedly threatened at rates as high as 200% — would hit Ireland hardest, given its heavy reliance on pharma exports to the US

🔭 The context: The US remains the EU’s largest export destination, accounting for over 20% of goods exports, with pharmaceuticals and cars among the top categories
• Trump’s protectionist stance has intensified trade frictions, even as Brussels seeks a negotiated trade agreement
• Germany’s economy, with 22.7% of its exports going to the US, is heavily dependent on automotive sales
• Ireland, where more than half of all goods exports go to the US and pharma accounts for 55% of its exports, is particularly exposed if tariffs on medicines materialise

🌍 Why it matters for the planet: The tariffs exacerbate economic uncertainty in Europe, with implications for industrial policy, sustainable investment, and supply chain resilience
• Squeezing high-tech sectors like pharmaceuticals could deter innovation and shift investment away from Europe, while prolonged trade disputes risk undercutting cooperation on climate and health initiatives
• The pressure to onshore production may also shift environmental burdens, with consequences for both emissions and resource use

⏭️ What's next: Negotiations between the EU and US will be critical in the coming months to avert deeper economic damage and avoid a tit-for-tat tariff escalation
• Analysts expect pharmaceutical firms to accelerate US-based production and adjust pricing strategies to mitigate political risk
• German and Irish policymakers are lobbying for exemptions or alternative arrangements
• A resolution on pharmaceutical tariffs — possibly lower than the threatened 200% — is expected before the end of 2025, but uncertainty remains high

💬 One quote: “Ireland is particularly exposed to this risk … exports to the US represent 18% of Ireland’s GDP, and pharma exports represent nearly 55% of Irish exports,” — Mathieu Savary, Chief Strategist, BCA Research

📈 One stat: Ireland’s cumulative GDP loss from US tariffs could reach 3% by 2028, according to Bruegel

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