Eurozone Economy Grows 0.1% in Q2 Amid U.S. Tariff Impact

Europe's economy showed minimal growth of 0.1% in the second quarter of 2025, a slowdown following a stronger 0.6% expansion in the first quarter that was largely driven by companies rushing to export goods ahead of new U.S. tariffs imposed under President Donald Trump's administration. The 15% tariff on European goods entering the U.S., part of the recent EU-U.S. trade agreement, is expected to weigh on European GDP by around 0.2%, contributing to weak growth prospects for the remainder of the year. Germany, Europe's largest economy, contracted by 0.1% in the second quarter due to declining investments in machinery, equipment, and construction, and continues to face challenges such as competition from China, higher energy costs, and structural issues like labor shortages and regulatory burdens. While other major eurozone economies like France and Italy saw slight growth or declines, Spain was the only strong performer with 0.7% growth. Economists predict that Germany will continue to struggle until increased government spending on infrastructure, expected to ramp up by 2026, helps stimulate the economy. Overall, trade tensions and tariff uncertainties remain the key factors dampening Europe's economic momentum despite some resilience shown by the eurozone economies.