US tariffs to hit Europe: Which economy will suffer most?

EU Exports: The US Is Eating a Big Piece, and Germany’s Automakers Are Feeling the Crunch

What’s at Stake for Germany, Ireland, and the Rest of Europe

Imagine the EU as a gigantic gift basket, and the USA is the neighbor who keeps coming over to dunk a finger in the sugar bowl. In fact, about one‑fifth of everything the EU ships abroad finds its way to the U.S. This isn’t just a friendly trade exchange—there’s a looming wave of tariffs that could stir the pot in different ways.

• German cars: The EU’s biggest hit for Germany comes from the car‑making sector. With the U.S. tightening its grip, German automakers might face steeper costs that could slow production lines and dent that famous German precision.
• Ireland’s pharmaceuticals: Meanwhile, a new and potentially tougher tilt towards Ireland’s pharma game could slam prices and supply chains harder than a spring roll in a thousand‑layer sandwich.
• Other countries: These sectors are just the headline players—many more industries might feel the ripple effects as the tariffs roll in.

In short, the U.S. market is a serious piece of the puzzle for the EU, especially for countries that lean heavily on car and pharma exports. The road ahead is packed with twists—and a few bumps that could feel like driving a rusty old car.

US Tariffs: The Auto Industry in a Tight Spot?

When the U.S. slapped a 25% tariff on the auto sector back in April, the ripple effect felt across Europe was instant. “We’re looking at a slump that could trim about 8 % off total EU trade volumes in the next five years,” says Rory Fennessy of Oxford Economics. The shock? It’s almost like the planet’s been given a bumpy, tax‑heavy ride.

Economic Fallout Across the European Union

• Germany – 22.7 % of total exports head to the U.S.
• France – 0.25 % of GDP could be yolked each year by tariffs in the long‑run.
• Italy, Ireland, and the Netherlands – all steeped in U.S. trade, too.
• Austria and other Central/Eastern European nations – heavily tied into Germany’s supply chain, so they’re not safe.

Germany’s Motor‑Driven Export Rush

Germany is the automotive juggernaut, and its engines are now running on a double‑cutted fuel. Andrew Hunter of Moody’s Ratings notes, “Germany stands out as the major European economy likely to be hit hardest by U.S. tariffs, and we expect GDP growth to slump in the second and third quarters.” That’s the equivalent of a rush hour brake in a world that’s already been cold‑spun by uncertainty.

Impact on Small Central & Eastern European Players

Bruegel’s research tells a grim tale: after 2025, Germany’s GDP might light a permanent 0.4 % dark spot from these tariffs. “The effect has fully built up and initial short‑term effects dissipated,” says Niclas Frederic Poitiers. France’s hit is gentler – a 0.25 % annual dip. Even places with far less direct exposure, like Spain or France, will feel the tremor through a global slump and uncertainty.

Worst‑Case Scenario for Ireland

Ireland’s economy is 53.7 % of its goods exports going to the U.S. – a half‑pile leaning on the pole. “If the pharmaceutical sector gets tariffs, Ireland will be the EU economy most at risk,” points out Mathieu Savary, chief strategist at BCA Research. Imagine the crisis: every time a drug enters, a part of GDP might slip down a notch.

How pharma tariffs could hit the European economy in particular

Europe’s Pharma Powerhouse Gets a Rough Dose of US Tariffs

When you think of Europe’s high‑tech giants, pharmaceutical research is often the crown jewel. In 2022, it plugged into the EU economy like a supercharger, adding a whopping €311 billion of gross value added (GVA) and creating 2.3 million jobs—both directly and indirectly. That’s a lot of prescription pills and paperwork that keep the economy humming.

Why the US is the Top Dose of Demand

The United States is basically the pharmacist’s best friend. The European Federation of Pharmaceutical Industries and Associations (EFPIA) got the numbers: in 2021, North America took 49.1 % of global pharmaceutical sales, while Europe was down to 23.4 %. And if you stash the exports in a pill bottle, more than one‑third of the EU’s pharmaceutical products are headed straight for American buyers.

Tag is an Extra Dose—The 25% Pain

Moody’s is already predicting that a 25 % tariff could be jotted onto the pharmaceutical market. Hunter, from the think‑tank, said the “most exposed” countries would be the smaller nuts and bolts of Northern Europe: Denmark, Belgium, Slovenia, and Ireland—places where the recession alarm is already tick‑ticking higher.

And guess what? Ireland is basically about to feel that sting. BCA Research’s chief strategist puts the spotlight on Ireland, noting that pharma exports make up 55 % of Irish trade and that they account for a solid 18 % of the country’s GDP. That’s a big pill to swallow.

Projected Impact on Growth

• Growth could dim by 4 % to 5 % over time.
• Bruegel’s model estimates a cumulative real‑GDP loss of 3 % by 2028.
• In terms of people—jobs are the most vulnerable; Ireland tops the chart in the US tariff game.

Italy’s Backup Plan

When it comes to job exposure, Italy is the country that’s stuck on second place. It has a high exposure in transport equipment and a tough spot in fashion and car manufacturing. And yes, pharmaceuticals are a big part of that cocktail, too.

Takeaway

So, while Europe’s pharmaceutical sector is a high‑tech marvel, a hefty tariff from the US could put a heavy pill on smaller European economies, especially Ireland—think of it as a medicine that’s a little too strong and could tip the scale against growth and jobs.

Would there be a 200% tariff on pharma products?

High‑Flying Tariffs: Trump Opens the Door to a 200% Pharma Surge (or a Smart Pivot?)

On Tuesday, the former president tossed a bombshell over the horizon: any pharmaceutical product shipped into the United States could face a 200 % tariff. Nothing more, no fine print—just a headline‑maker that sparked a flurry of speculation.

Why The Shock Is Almost Too Much to Handle

• Health Care Costs Are Already a Pain – BCA analyst Savary warns that slapping a twice‑as‑large duty on medicines would make a wobblingly painful list for American patients.
• Voters Are Already at Their Wits’ End – “That’s how much money they’re already paying for healthcare,” Savary points out, noting the public’s indifference to any further price hikes.
• It’s More a Sting to the System – “Think of it as a loud wake‑up call to foreign drug makers,” he says. “They should cut prices or start churning out their meds right here in the U.S.”

From Threat to Tangible Action (You’re Welcome, U.S.)

Savary foresees a two‑step finish: tougher U.S. production mandates and a cut in drug prices. FDIs (Foreign Direct Investments) in American facilities could become the new norm, making it easier for consumers to get their prescriptions without flashers over the next big hike.

Experts’ Verdict on the Fallout

• Dan Coatsworth, an investment analyst at AJ Bell, has summed it up: “Now the ball’s in the hands of drug companies. The pressure’s on them to set up shop in the U.S. so they’re literally at our doorsteps.”
• The message is crystal: produce at home or pay the price—and this could reshape the entire supply chain.

So, will the U.S. see a surge in domestic drug production, or will it become a case of “keep price low, cut tariff high”? Only time will reveal the final act, but the stage is already set.