The US tariff shock in 2025 vs 2026 – same negative impact, different drivers in World Economy News 22/04/2026 The rollout of new US tariffs in 2025 triggered months of uncertainty and market volatility. One year on, their impact is becoming clearer. Although the tariff hike was historical, its direct effect on the European economy proved more muted than initially feared. This not only reflected exemptions, tariff front-loading and strong US demand for pharmaceutical imports (especially from Ireland), but also the fact that US tariffs on many competing suppliers also rose sharply in 2025, temporarily preserving Europe’s competitive position on the US market. Still, higher tariffs, the stronger euro, and heightened uncertainty weighed visibly on EU‑US trade. Looking ahead, the drivers of EU-US trade are shifting. The Turnberry deal locks in a 15% tariff rate for EU exports, while tariffs on competing countries are also set to converge towards 15% in 2026. Countries such as China (31.1% effective tariff rate in 2025), India (20.5%) and Indonesia (20.8%) will therefore face substantially lower tariff rates than in 2025, eroding the EU’s relative position on the US market. As a result, the drag on EU exports is likely to persist, driven less by uncertainty and tariff asymmetries and more by a deterioration in relative competitiveness. US tariffs jumped sharply in 2025, but less than feared US tariffs increased sharply in 2025. The effective tariff rate rose by 8.1 percentage points, a historic jump, but one that ultimately proved less severe than the most adverse scenarios had anticipated. This more benign outcome partly reflected tariff‑stacking rules and sector‑specific exemptions, and partly the ability of exporters to adapt by rerouting trade flows or adjusting the composition of shipments to the US market. For the EU, the effective tariff rate climbed to 8.5% in 2025, up by 7.2ppt compared with 2024. Despite the EU’s common external tariff, effective tariff levels varied across countries due to different export structures and access to exemptions. As such, France, Belgium, and the Netherlands faced roughly half the effective tariff burden of countries such as Germany, Italy or Spain. EU‑US exports in 2025: Tariff front‑running, Irish outperformance and a sharp post‑tariff decline EU exports to the US followed a highly uneven pattern in 2025. Ahead of Liberation Day, exporters rushed shipments across the Atlantic in anticipation of higher tariffs, temporarily boosting exports by up to 35% year-on-year. This front‑loading effect was particularly pronounced in Ireland, where strong US demand for weight loss‑related pharmaceutical products largely offset the negative impact of tariffs throughout the year. Once higher tariffs took effect, however, EU‑US trade weakened markedly. EU exports to the US, excluding Ireland, fell by 4.1% in 2025, despite exports to the rest of the world increasing by around 1.5% last year. This sharp difference suggests that the tariff shock had a strong negative impact on EU‑US trade, even if it was temporarily masked by front‑loading and Ireland‑specific factors, and broader macroeconomic developments like the strengthening of the euro. Tariff impact in 2025: Uncertainty amplifies the hit, competitiveness cushions the blow Given these overlapping effects, what was the net impact of US tariffs on EU US trade in 2025? To answer this, we isolate and decompose the impact of US trade policy on EU trade into three cha