While the impact on certain sectors and product lines could be large, the aggregate macroeconomic effect on Europe is likely to be small. Of more concern, according to Nomura's George Buckley, is that this is only the opening gambit – Europe is now firmly in Mr Trump's sights, particularly being responsible for more imports to the US than any other bloc, and his comments from the White House just underscored that

*TRUMP: IM NOT HAPPY WITH THE EU
*TRUMP ON THE EU: WE'LL WIN THAT FINANCIAL BATTLE
*TRUMP: ABSOLUTELY WILL PUT TARIFFS ON CARS
Nomura has published a report (available to pro subs in the usual place) with European macro forecasts which are based on the US ultimately applying 10% tariffs against Europe, and the EU responding in kind. Below we excerpt the key highlights from the report:

Tariffs – the opening gambit

The EU this morning announced "proportionate" retaliatory measures and imposed tariffs on US products entering the EU in response to Trump's imposition of 25% tariffs on global aluminium and steel imports to the US.

The US tariffs, which are now in force, build on those Trump imposed in 2018 in two ways: 

i) 25% rather than the 10% aluminum tariffs in 2018, 
ii) the new tariffs broaden the base by adding more final products (not just the raw metal itself). 
In total, the US tariffs will affect around €26bn of EU exports to the US (which is about 5% of total EU exports to the US).

Europe's response

In response, the European Commission has said it will retaliate in two stages. 

First, at the start of April, it will reinstate the tariffs put in place during Trump's first term. 

Second, from mid-April, it will apply tariffs to an additional set of US imports – for that purpose the Commission is consulting over the next two weeks on a list of products (industrial and agricultural products, not just Harleys and bourbon) on which it might add tariffs. The EU's intention is to place retaliatory tariffs on €26bn of US imports.