It is being reported that the ECB is now seeing US tariffs to have a much bigger impact than they thought it would have in their first estimation. The central bank previously estimated a 50 bps hit to euro area growth in the first year but that is now set to be under revision. One source estimates that the hit could be in excess of 100 bps in the first year now.
This is another issue that markets will have to brace themselves for with regards to the tariffs. If they are in place for a prolonged period, the adverse impact might be much greater than what many will be anticipating. The amount of uncertainty still up in the air is quite staggering at this stage.
This article was written by Justin Low at www.forexlive.com.