Speaking today, ECB President Christine Lagarde said growth in the Eurozone is expected to weaken in Q3 as earlier tariff-related frontloading unwinds.
A key factor is the new EU–U.S. trade deal, which implies an effective tariff rate of 12–16% on EU goods entering the U.S. Lagarde stressed it is “still close to” the June baseline scenarios, and remains below the severe scenario of tariffs exceeding 20% that staff had also considered.
Nevertheless, “uncertainty persists as sector-specific tariffs on pharmaceuticals and semiconductors remain unclear”, she added.
Lagarde confirmed ECB will incorporate the updated tariff framework into its September projections, which will help shape policy decisions in the coming months.
