Trade War 2025: Historic record for U.S. import tariffs

Because of Trump's actions, the average U.S. import tariff is now 25.5% worldwide. This is the highest level since 1890. According to our experts, this average tariff will drop to 10.2% by the end of 2025, thanks to many negotiations and bilateral agreements.

This is according to our latest report on world economy for 2025-2026. It shows that global economic growth in 2025 falls to just +2.3%, the lowest level since the corona pandemic. A mild recession is expected for the United States with negative growth of -0.5% in three consecutive quarters. The trade war and associated uncertainty will reduce the value of global exports by $480 billion this year.

For the Eurozone, we assume minimal growth of only +0.8% in 2025. Johan Geeroms, our Director of Risk Underwriting Benelux: "Lower exports to the U.S. hit especially hard for Germany, France and Italy. Germany is expected to lose $9 billion in export earnings. For France and Italy, the export losses are $7 billion and $9 billion, respectively.

Johan Geeroms is most concerned about smaller companies. "Large companies are strong enough to temporarily absorb higher purchase prices and demand outages. The buffers of many smaller companies are vulnerable. They also cannot simply pass on price increases. Especially for companies that are already struggling with minimal margins, I foresee tough times."

Another thing that will not help European industry, according to Johan Geeroms, is the avalanche of Chinese goods being dumped on the European market. "China is the main target for Trump. Container transport from China to the U.S. is already virtually at a standstill. Containers are piling up at Chinese ports. There is a good chance that surplus products will end up in Europe at minimal prices. That has major implications for European industry."

According to Johan Geeroms, companies worldwide will try to protect themselves with short-term measures such as stockpiling, shifting supply chains and price adjustments. "Many companies won't make it through that. Globally, bankruptcies will increase +7% this year, we expect. Especially in the US, many companies are going under: +16%. In Europe, we assume +5% more bankruptcies."

Some compensation can be expected from German measures, according to Johan Geeroms. "Chancellor Friedrich Merz's plans to invest massively in infrastructure and defense are also good news for Belgium and Luxembourg. That applies at all to all announced defense investments by European countries. Believe me, a large part of that will not go to the US. Where possible, European solutions will be chosen. Of course, that does give a boost to all kinds of industries, including in Belgium and Luxembourg." If half of EU countries' intended defense investments end up with European companies, that will give both Belgium and Luxembourg's GDP a 0.8 p.p. push, according to us.

Another bright spot could be the low interest rates. Johan Geeroms: "It is true that the rate increases lead to higher prices and thus inflation-increasing. But the overall economic downturn, due in part to a drop in demand, will reduce inflation. This creates room for the ECB to cut interest rates to boost the economy. Our research department foresees a 4% to 1.5% drop-in interest rates in Europe by the end of 2026." In the US, we foresee interest rates will fall to a lesser extent.