(MENAFN) The European Commission has revised its economic growth projections for 2026, citing risks from US tariffs and global geopolitical tensions.

A trade deal between Brussels and Washington, finalized in July, introduced a 15% tariff on EU car exports and most other goods.

Additionally, the agreement commits the EU to purchasing $750 billion worth of US oil and gas, along with investing $600 billion in the US economy.

This deal, which came after prolonged negotiations and threats of tariffs, has been met with criticism for its perceived imbalance and potential negative impact on EU competitiveness.

In its biannual economic outlook published on Monday, the European Commission lowered its growth forecast for the eurozone in 2026, projecting a 1.2% growth rate, down from the previous estimate of 1.4%.

Similarly, the broader EU's growth forecast was reduced to 1.4%, from 1.5%. The Commission attributed this downgrade to the higher-than-expected US tariffs on EU exports and uncertainty over possible future measures from the US.

According to the Commission, “Persistent trade policy uncertainty continues to weigh on economic activity, with tariffs and non-tariff restrictions potentially constraining EU growth more than expected.”

EU economy chief Valdis Dombrovskis echoed this sentiment, noting that “Trade barriers have reached historic highs… The EU’s highly open economy remains susceptible to ongoing trade restrictions.” Dombrovskis also warned that US trade policies, as well as reactions from other major players like China, could “dampen global trade.”

Furthermore, the European Commission cautioned that “any further escalation of geopolitical tensions could intensify supply shocks,” and it highlighted that climate-related disasters could also present significant risks to EU growth in the coming years.

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