By 2025, it is unlikely that Europe will experience the long-awaited rise in industrial production and consumption of metals, primarily steel. Although the effect of previous investments may improve in the second half of the year, more significant changes that have been undertaken to revive production in the EU have been postponed until 2026, multinational bank ING said.
At the beginning of the year, industrial production in the EU and the eurozone was 5% lower than two years ago, while it remained stable in the United States and 13% growth was recorded in China over the same period, according to an ING report published on May 1.
In February, production in both the EU27 and the eurozone rose to its highest level since August 2024, and in April, the manufacturing PMI rose to 51.2, the highest level in almost three years. According to ING, while the prolonged decline in European industrial production that began in the first quarter of 2023 has shown signs of declining purchasing power, new uncertainties related to US President Donald Trump's import tariffs are currently undermining confidence and reducing investment in the manufacturing sector.
The introduction of 20% reciprocal EU duties has been postponed for 90 days, but 25% duties on steel, aluminum, cars and auto parts remain in force, while most other goods produced in the EU are now subject to a 10% duty.
Exports from the eurozone to the US increased significantly before the tariffs were announced, but "as long as tariffs remain in place and uncertainty remains about further and higher fees, the US[the largest export destination providing 20% of extra-EU trade]is likely to no longer be a growing market for European countries."". The goods," says ING.
Although it is impossible to fully quantify their impact, ING believes that 20% tariffs will reduce eurozone GDP growth by 0.3 percentage points over the next two years. According to the bank's estimates, in addition to pharmaceuticals, the engineering and equipment industries will suffer the most, accounting for 26% of EU exports to the United States in 2024, amounting to 530 billion euros.
" The picture may change somewhat in the near future. in the second half of the year, if the trade storm subsides and European producers and consumers can look to the future with more confidence," ING says, adding that "at the same time, uncertainty about trade barriers remains a major factor undermining confidence and investment," and that "we probably We will have to wait until 2026 for a significant increase in industrial production due to government investments in infrastructure and defense. "
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