ECB Economists: Trade Tensions Weakened Eurozone Credit Conditions, Peak Impact in 2025

According to ECB economists on July 15, geopolitical uncertainty and trade tensions reduced credit demand among eurozone exporters while tightening lending standards. Economists including Petra Köhler-Ulbrich noted that European automakers faced the most severe impact from tariffs, encountering stricter credit standards that compounded existing structural challenges. Banks also increased monitoring of affected firms even as some maintained lending conditions unchanged. The impact on credit conditions peaked between April and October 2025, but eased later that year following a preliminary U.S.-EU trade framework agreement and reduced policy uncertainty.
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