Global: European Firms Warn of Stronger Economic Strain from US Tariffs by 2026

European businesses are preparing for a significantly sharper economic impact from U.S. tariffs and broader trade tensions in 2026, according to a new survey published by BusinessEurope. While companies were able to soften the effect in 2025 through front-loaded orders and supply adjustments, the survey indicates those buffers will not hold the following year.

The analysis shows that trade tensions are expected to reduce GDP in the euro zone, the wider European Union, and other European economies by about 0.03 percentage points in 2025. However, by 2026, the projected economic drag rises sharply to between 0.5 and 0.6 percentage points, with the euro zone anticipated to face the steepest decline.

The survey reflects responses from 36 national business federations across the EU and neighboring non-EU markets, including the United Kingdom, Switzerland, Turkey, and Ukraine.

BusinessEurope noted that the findings align with the European Central Bank’s assessment that tariffs and trade uncertainty could weigh on euro zone growth by roughly 0.7 percentage points over the 2025–2027 period. The ECB has also acknowledged that the risk outlook improved somewhat following the EU-U.S. agreement reached in late July, which helped reduce short-term policy uncertainty.

However, the business group stressed that companies remain concerned about unpredictable trade conditions. It added that delayed economic effects and the lack of clarity surrounding future U.S. tariff decisions pose ongoing challenges for investment planning and medium-term growth across Europe.