Eurozone GDP Grows 0.4% in Q1 Amid Trade Tensions

The eurozone economy outperformed expectations in the first quarter of 2025, with GDP rising 0.4%, double the rate of the previous quarter, as reported by Eurostat and other official sources. This growth was partly attributed to companies accelerating exports ahead of new U.S. tariffs, which President Trump announced in early April, including a 20% tariff on most European goods. While the initial economic data showed strength—particularly in countries like Ireland, Spain, and Italy—economists warn that the effects of these tariffs, along with pre-existing levies on steel, aluminum, and autos, are likely to slow growth in the coming months. Business and consumer sentiment in the eurozone has already declined, with the European Commission's economic sentiment indicator dropping to its lowest since December. The European Central Bank has responded with multiple interest rate cuts, and Germany has approved a significant investment fund, but these measures may take time to offset the negative impact of trade tensions. Overall, the outlook for the rest of the year is cautious, with a risk of weaker growth as tariff effects take hold and external uncertainties persist.