The conclusion of ongoing EU free trade negotiations could boost the European economy and offset the negative impacts of US tariffs, according to a study published by Econpol Europe on Wednesday. Depending on the depth of the new trade agreements, European industrial added value could permanently increase by up to 1.1 percent, and overall European economic output could rise by 0.43 percent.
According to Ifo researcher Lisandra Flach, new trade pacts with Mercosur countries, India, Australia, the United Arab Emirates, and Southeast Asian nations could provide a medium-term lift to the European economy, despite the damaging repercussions of US tariffs on global trade.
All EU member states stand to benefit from the finalization of these new EU trade agreements. Specifically, the German economy could see a medium-term boost of up to 0.47 percent, France by up to 0.29 percent, and Italy by up to 0.33 percent. Malta, Belgium, and Ireland are projected to benefit the most, with gains of 1.91 percent, 1.14 percent, and 1.13 percent, respectively. Flach noted that without new trade agreements, US punitive tariffs would restrain the European economy by 0.08 percent, with the industrial sector being particularly vulnerable, facing an added value loss of 1.32 percent.
The study analyzed the economic effects of proposed EU trade agreements with Mercosur countries (Brazil, Argentina, Uruguay, and Paraguay), India, Australia, Indonesia, Malaysia, Thailand, and the United Arab Emirates. Negotiations for agreements with Mercosur, India, Australia, and Indonesia have already been concluded and are awaiting final ratification.
