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How is trade policy uncertainty affecting euro area activity?

Author

Listed:
  • Bobasu, Alina
  • Pierluigi, Beatrice

Abstract

Trade policy uncertainty has risen sharply since late 2024 and remained at exceptionally high levels in 2025. This box investigates the implications of elevated trade policy uncertainty for euro area economic activity. It discusses the main transmission channels and shows that euro area sentiment tends to deteriorate when trade policy uncertainty rises. Empirical estimates suggest that the increase in trade policy uncertainty in 2025 weighed on euro area output and affected the manufacturing sector most significantly. Nevertheless, thanks to a number of offsetting factors, overall economic activity remained resilient. JEL Classification: E21, D81

Suggested Citation

  • Bobasu, Alina & Pierluigi, Beatrice, 2026. "How is trade policy uncertainty affecting euro area activity?," Economic Bulletin Boxes, European Central Bank, vol. 2.
    • Handle: RePEc:ecb:ecbbox:2026:0002:4
    Note: 591179
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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/focus/2026/html/ecb.ebbox202602_04~e3daeb434a.en.html
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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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