To The Moon

Economists at Goldman Sachs Group point out that the latest threatened 10% tariff policy by U.S. President Donald Trump could lead to a reduction in the Eurozone's Gross Domestic Product (GDP) of approximately 0.1 percentage points. Announced last Saturday, Trump's tariffs would target eight European nations—Denmark, Norway, Sweden, France, Germany, Finland, the United Kingdom, and the Netherlands—that voiced support for the Danish semi-autonomous territory of Greenland amid U.S. intentions to acquire it. The Goldman Sachs team estimates that a 10% tariff would cause a 0.1% to 0.2% decline in the real GDP of the affected countries through a contraction in trade channels. Further analysis by the team indicates that under a gradual, reciprocal tariff escalation, Germany would bear the most significant impact, with its real GDP falling by about 0.2%; if comprehensive tariffs were imposed, the decline could widen to approximately 0.3%. The team, which includes Sven Jari Stehn, wrote in the report: "Should negative confidence shocks or heightened financial market volatility occur, the actual economic impact could far exceed current estimates." Global financial markets experienced notable turbulence due to escalating trade tensions—European stocks fell in sync with U.S. index futures on Monday, while prices of traditional safe-haven assets like gold climbed significantly. However, a number of market strategists noted that, given the global economy's fundamentally robust condition, the negative impact of trade friction on European equities might be limited to short-term volatility. Goldman Sachs economists stated that whether the tariffs materialize is "highly uncertain"; the EU might first pause the U.S.-EU trade agreement, then impose retaliatory tariffs, or even activate the so-called "anti-coercion instrument." They anticipate that the UK will, as it did last year, prioritize diplomatic engagement with the Trump administration. According to informed sources, the EU is currently discussing imposing tariffs on American goods worth 93 billion euros (approximately $108 billion), while also evaluating options for countermeasures beyond tariffs. Nonetheless, the EU still plans to prioritize seeking a resolution through diplomatic channels to prevent further escalation of the trade dispute. Goldman Sachs economists further noted that the inflationary impact of the relevant policies is "very limited," and they predict that, given the weakening GDP growth outlook, major central banks are likely to implement interest rate cuts to stimulate the economy.