U.S. dollar strength to remain; Fed to hold interest rates until December

Reciprocal tariffs another tool to extract policy concessions

Trump’s tariffs pose uneven subnational risks across the EU

Trade tensions between the EU and the US are escalating. Aggressive protectionist policies have been a key instrument for Trump in the opening months of 2025, and the president has indicated that both blanket and sector-specific levies on EU good exports could be imposed within the coming weeks.

Tariffs hurt, even if some are just threats

Tariffs don't have to be imposed to wreak economic harm – threats are enough. So the recent flurry of announcements by the US, followed in some cases by swift postponements, are already increasing trade uncertainty and making it less likely that companies will invest.

Tariff impacts expose vulnerabilities in Ireland and CEE

Blanket 10% tariffs on EU exports to the US, now part of our baseline, will have a significant but uneven sectoral impact. Our industry-level modelling suggests that the pharmaceutical and high-tech industries would be the most affected. Similarly, smaller, less diversified economies are more exposed. We estimate that Ireland and Central and Eastern European (CEE) economies will experience the largest hit.