As the fallout from President Trump’s rewiring of global trade sets in across Europe, governments are putting in place billions of euros’ worth of “tariff shields” to protect their economies, companies and workers from uncertainty and the growing prospect of a recession.
Germany, Italy, Portugal and Spain announced more than 50 billion euros’ worth of financial support this week as businesses paused exports to the United States, warned of a hit to their finances and reckoned with putting employees on furlough. More European countries are expected to follow.
Mr. Trump’s 90-day suspension of U.S. tariffs this week raised hopes in Europe for negotiations, but the damage has already been done. A severe rout in financial markets has compounded the problem, spurring governments to find lifelines at a time when their budgets are being squeezed by higher military spending as Mr. Trump pivots toward Russia from Ukraine.
The tariff pause is “fragile,” President Emmanuel Macron of France warned Friday, because 25 percent tariffs on steel, aluminum and autos and 10 percent tariffs on all other products are still in place, representing €52 billion in levies for the European Union.
“Europe must continue to work on all necessary countermeasures and mobilize all available levers to protect itself,” he said in a post on X. He added that French entrepreneurs and industrialists told him that their businesses were already being hit “right to the heart” by Mr. Trump’s tariffs.
The whipsaw of the tariff announcements has already led to lower growth forecasts. France, Germany, Italy and Spain — Europe’s biggest economies — downgraded their economic outlooks this week, and Moody’s ratings agency said in a new analysis that the tariffs had raised the risk of a recession in Europe.