Brussels: European industries are preparing for a heavier economic impact from U.S. tariffs in 2026, as new forecasts suggest that trade frictions across the Atlantic could sharply weaken growth and investment confidence. A comprehensive survey by Business Europe, which gathered insights from 36 national business federations, warns that the true toll of tariff pressures will become far more visible in the coming year.
According to the survey, the direct hit of U.S. tariffs and related trade tensions on European economies during 2025 has remained limited, cutting eurozone GDP growth by only 0.03 percentage points. However, the situation is expected to deteriorate sharply in 2026, when the drag on economic performance could expand to 0.5–0.6 percentage points. The eurozone, which maintains some of the world’s most integrated trade and manufacturing ties with the United States, is projected to suffer the hardest blow.
This shift reflects the delayed impact of trade disruptions. Many European companies spent much of 2025 restructuring their supply chains, redirecting exports, or stockpiling materials to soften immediate shocks. These defensive measures created a temporary buffer but one that cannot be sustained indefinitely. As those cushions fade and new tariffs come into effect, the deeper costs of trade uncertainty are likely to surface throughout 2026.
Despite a partial easing of tensions following the EU–U.S. agreement reached in July 2025, which helped reduce immediate policy risks, European business leaders remain uneasy. The survey indicates that the most significant challenge is unpredictability the inability to forecast what new tariff measures, policy shifts, or retaliatory actions might emerge from Washington.
Executives report that this uncertainty is delaying investment decisions, complicating budget planning, and reducing confidence in long-term growth. Many firms are also hesitant to expand exports or production lines for fear of being hit by sudden import duties or regulatory changes. For industries dependent on global supply chains such as automotive, machinery, and chemicals even minor disruptions can multiply into costly delays and market losses.
The findings echo recent warnings from the European Central Bank (ECB), which estimates that trade tensions could collectively shave up to 0.7 percentage points off eurozone growth between 2025 and 2027. Policymakers in Brussels and national capitals now face mounting pressure to shield domestic industries from the fallout. This includes accelerating trade diversification, bolstering intra-European commerce, and negotiating long-term tariff stability with Washington.
Still, Business Europe noted that the impact may ultimately be less severe than initially feared, thanks to July’s diplomatic progress. That deal curbed the risk of escalating tariff battles and improved predictability but it has not eliminated the sense of fragility in transatlantic trade relations.
Analysts suggest that the renewed tariff pressures could ripple beyond manufacturing to affect Europe’s financial markets, investment climate, and consumer sentiment. As companies pass on higher import costs, inflationary pressures may re-emerge, limiting the room for monetary easing. Moreover, if confidence weakens further, Europe could see a slowdown in private investment a key driver of growth amid already sluggish demand.
For smaller economies such as Belgium, the Netherlands, and Ireland, whose exports rely heavily on U.S. demand, the fallout could be particularly significant. Meanwhile, Germany and France the EU’s industrial anchors face complex supply-chain disruptions that could spread through the entire bloc.
Experts describe 2026 as the turning point for European businesses. The buffer strategies that muted the immediate effects of tariffs this year will likely expire, exposing industries to the full force of policy uncertainty. While the projected GDP loss of around half a percentage point may seem moderate, in a region already struggling with stagnation and weak investment, such a decline could tip parts of Europe toward recessionary territory.
Ultimately, the survey’s message is clear: Europe’s short-term resilience should not be mistaken for immunity. The transatlantic trade storm has only begun to gather momentum and without sustained diplomatic engagement, its full intensity could strike just as the continent’s recovery starts to weaken.