President-elect Donald Trump’s campaign pledge to impose a universal tariff on US imports from all countries may have a bigger impact on European exporters than their Chinese peers, according to analysis by insurance group Allianz Trade.

Governments of major exporting countries to the US are assessing the domestic economic implications from a second Trump term after the Republican won a resounding victory last week in the 2024 presidential election. Mr Trump has threatened to impose levies of up to 20% on all imports and tariffs of up to 60% for goods originating from the US’s main geopolitical rival, China.

While the extent and timeline of these measures remains to be seen, forecasters have been trying to predict the global economic fallout. 

Allianz Trade predicts up to $135bn of combined lost global exports in 2025 and 2026 based on a ‘contained trade war’, where the US hikes tariffs against China to 25% on half of non-critical US imports and raises 5% tariffs on the rest of the world, excluding Canada, Mexico and critical goods. 

Goods deemed critical are those that meet three conditions. These are for goods in which the US is a net importer; the US imports more than half of a certain good from one respective country; and where that respective country has a more than 50% share of global exports in that same good. 

In the case of a ‘full-fledged trade war’ — where Mr Trump imposes a 10% universal tariff and a 60% tariff on China — Allianz says the global export loss from the protectionist policies could be as high as $510bn. 

Europe would be the most impacted under the contained trade war scenario, losing a combined total of exports worth $38.6bn in 2025 and 2026 — a figure that rises to $124.8bn in a full-fledged trade war, according to fDi analysis of Allianz’s forecasts for 11 European countries including the UK and Switzerland. 

Germany will lose out on the most, according to Allianz, with $8bn worth of exports impacted by the 5% import tariffs on non-critical goods in a contained trade war scenario. ABN Amro, a Dutch bank, has predicted that a 10% universal tariff “would cause a collapse in exports to the US”, with trade-oriented countries like Germany and the Netherlands likely to be particularly badly impacted.

Maxime Darmet, senior economist for US, France and the UK at Allianz Trade, tells fDi that Trump’s tariffs will create a lot of uncertainty that will weigh on investment decisions in Europe.

“Trump is likely going to target some sectors more than others. For Europe, he could target machinery, equipment, autos, chemicals, pharmaceuticals and agri food, which are the biggest exporters from Europe to the US,” he said. Europe’s direct export loss is expected to be “higher than China because, for the latter, we would expect significant fiscal stimulus to offset much of the hit from the trade war,” he added, noting that there is more limited space in Europe for governments to use fiscal policy in response.

Another Dutch bank, ING, said that a “looming new trade war could push the eurozone economy from sluggish growth into a full-blown recession”. 

China, the second-largest exporter into the US by value in 2023 after Mexico, is set to be the most impacted economy in a full-fledged trade war, losing a combined total of exports worth $125.3bn in 2025 and 2025. Major exporting economies such as Mexico (–$52.1bn), Canada (–$39.2bn), Japan (–$24.3bn) and South Korea (–$20.3bn) would also be hard hit by a 10% universal tariff over those two years.

If the Trump administration was to pursue a full-fledged trade war, the average effective tariff on US imports could rise from 2.7% in 2023 to between 12% and 20%, according to Allianz research. The insurance group expects the administration to incrementally impose tariffs, starting as early as the second quarter of 2025.

The Tax Foundation, a think tank, estimates the average tariff rate on all imports could reach as high as 17.7% in 2025 under these proposed tariff hikes — a rate not seen since 1934, during the Great Depression.

“Exporters to the US must assess their exposure to this new protectionism,” Simon Evenett, professor of geopolitics and strategy at IMD Business School, said. “Before the tariffs are imposed, elevated trade policy uncertainty will take its toll on investment and sourcing decisions.

“None of this is good for global trade.” 

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