US President Donald Trump’s threat to impose a 50% tariff hike on the EU has put the cat amongst the pigeons again. If he follows through then Europe, which is highly dependent on US trade, will be amongst the most damaged economies in the world in the escalating trade wars, says Oxford Economics in an emailed note.

Exports are reshuffling global trade vulnerabilities, with Germany and Ireland among the most exposed economies, according to Gabriel Sterne, Head of Global Emerging Market Research at Oxford Economics.

“We assess that the EU economies with a high ratio of US exports to their GDP would suffer the most – Germany and Ireland,” Sterne said, following a new ranking of 60 global economies based on their exposure to current and prospective US tariffs. While uncertainty remains over whether Trump will follow through – many believe the threat is merely a negotiating position – the risk alone is already weighing on global activity.

“The additional policy uncertainty will be a deadweight cost to global activity by adding risks to decisions on expenditures,” Sterne said, referring to the mounting hesitancy among businesses and investors to commit to long-term projects in the face of volatile trade conditions.

The report evaluates four key channels of exposure: the direct substitution effect as the US shifts away from tariffed imports, the relative tariff burden compared to competing exporters, the ability to redirect lost US trade to other markets, and the broader impact of uncertainty on trade terms.

If tariffs on EU goods were raised to 50%, the relative competitiveness of non-EU exporters would improve markedly. “The biggest relative losers after “Liberation Day” were non-China Asian economies, many of which have big trade surpluses with the US. Now those economies, along with Mexico and Canada, stand to gain the most in terms of becoming more tariff-competitive in US import markets, relative to both China and the EU,” Sterne said.

China, which previously bore the brunt of US trade penalties, would see its relative position improve. “If the EU tariffs go ahead, China would go from enduring the largest tariff rate in US import markets relative to competitors to much closer to the middle of the pack,” Sterne said.

At the heart of Sterne’s analysis is a critique of the broader logic of US tariff policy. “Given the US has revealed high sensitivities to bilateral trade imbalances, the current constellation of US tariffs lacks coherence as it may exacerbate already large trade imbalances with some East Asian economies,” Sterne noted.

Relative winners in this environment include economies with minimal trade exposure to the US, low tariff rates, limited substitutability of exports, or flexible reorientation toward other markets. These factors have shifted rankings significantly since the US began adjusting its trade stance. “The rankings if EU tariffs increase to 50% are markedly different to those that existed on May 21,” said Sterne.

As trade tensions deepen, the global supply chain is increasingly defined by policy signals rather than market forces. “The overall rankings immediately following April 2’s Liberation Day were, in key respects, starkly different to both last week and with EU tariffs very high,” he added.

Germany and Ireland most exposed to US tariff risks

The ranking from Oxford Economics shows that Germany and Ireland face the highest vulnerability to US tariffs among the top 60 listed.

The Global scorecard of impact of US tariffs evaluates countries based on four distinct exposure channels: direct tariff impact, relative tariff disadvantage, the potential for export reorientation, and the terms of trade impact from global slowdown. A composite score, with 10 representing the worst-case scenario, shows Germany, Ireland and Italy leading the global ranking in overall tariff vulnerability with scores over 7.

“Germany’s exposure is especially high due to the combination of a large export share to the US and limited flexibility in re-routing goods to other markets,” said Sterne. The chart shows Germany scoring strongly across all four metrics, with particularly high marks in both direct tariff hit, and tariff disadvantage compared to competitors.

Ireland, Italy, Belgium and the Netherlands round out the top five, all reflecting the EU’s heavy integration into global value chains and dependence on US demand for key sectors such as pharmaceuticals, autos and machinery.

China, once the prime target of US trade measures, now sits further down the risk ranking, buoyed by a relative easing in its tariff disadvantage.

At the opposite end of the scale, countries such as Angola, Nigeria and Brazil face minimal exposure. These economies benefit either from limited trade with the US, lower tariff sensitivity, or more flexible export markets. Notably, major East Asian manufacturing hubs such as Vietnam and Thailand are positioned in the upper-middle of the risk scale, reflecting a blend of vulnerability and opportunity from shifting US sourcing strategies.

The scorecard adds empirical weight to concerns that arbitrary tariff hikes could exacerbate imbalances rather than correct them and the current constellation of US tariffs lacks coherence.