Eurozone GDP Contracts 0.2% as Europe 50 Faces Tariff and China Risks

Eurozone GDP shrank 0.2% qoq in Q1 2026, marking the latest setback for the Europe 50 index after weeks of mounting external and internal pressures. The contraction follows a May 26 survey showing 68% of EU firms still expanding in China, prompting the Commission to debate import quotas and a 'Buy European' drive. On June 3 the U.S. proposed 12.5% tariffs on EU goods while unveiling the Cloud and AI Development Act and Chips Act 2.0 to cut reliance on U.S. tech. Weak trade and investment dragged growth lower, compounding risks ahead of the June 18-19 EU leaders' summit.