Goldman Sachs slashes European growth forecasts

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Goldman Sachs expects gross domestic product across the 20 countries that use the euro to expand 0.8% next year, down from an already-pessimistic 1.1% it forecast previously. Notably, Goldman downgraded Germany’s economic growth to 0.5% next year from its original forecast of 0.9%.

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Trump’s proposed tariffs are expected to hit the German auto market especially hard. Cars are Germany’s single largest export, and the U.S. is the country’s largest export market. Volkswagen’s share price fell sharply on Wednesday, although it reversed most of its losses on Thursday.

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Within European equities, the market is also watching to see if Trump will roll back some green initiatives and whether Trump will pressure European NATO members to spend more on defense. NATO members must spend at least 2% of GDP on defense, which Trump has argued is too little.