Trump’s Tariffs Could Help Europe More Than America on Inflation

President Donald Trump’s push for higher tariffs under his “America First” agenda may end up boosting prices at home while giving Europe an unexpected economic edge.

Trump’s proposed tariff hikes are widely expected to raise costs for U.S. consumers, as businesses pass on the price of import taxes. But in Europe, the impact could be quite the opposite. According to economists at Nomura, the tariffs may “Make Europe Great Again” by easing inflationary pressure across the continent.

How? As the U.S. becomes a more expensive market for exporters, particularly China, excess goods could be redirected to Europe, increasing supply and putting downward pressure on prices there. At the same time, a strengthening euro is making imports cheaper for European buyers.

Lower inflation in Europe could allow the European Central Bank to cut interest rates if needed, giving policymakers more flexibility to support growth. Meanwhile, higher inflation in the U.S. could limit the Federal Reserve’s ability to lower rates if the American economy slows.

Even the International Monetary Fund echoed this warning, noting in its latest outlook that Trump’s tariffs are likely to fuel U.S. inflation.

Tariffs are, in effect, taxes on imports, whether on finished goods or components, and American companies are already signaling they’ll have to raise prices. Adidas CEO Bjørn Gulden recently said that while U.S. consumers may soon face higher costs, there’s “no reason” to raise prices elsewhere.

In trying to protect American industry, Trump’s trade policies could unintentionally give Europe a break, while leaving U.S. households to foot the bill.