𝐓𝐫𝐮𝐦𝐩’𝐬 2025 𝐓𝐚𝐫𝐢𝐟𝐟𝐬 𝐒𝐡𝐚𝐤𝐞 𝐄𝐮𝐫𝐨𝐩𝐞𝐚𝐧 𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬: 𝐂𝐥𝐨𝐜𝐤 𝐢𝐬 𝐭𝐢𝐜𝐤𝐢𝐧𝐠

U.S. 20% tariffs targeting EU goods, pending a suspension of 90 days to allow for negotiations, has reignited trade tensions with global repercussions.

Economic confidence across the eurozone is faltering. While the bloc reported 0.4% GDP growth in Q1 2025 (ahead of expected 0.2%), sentiment has turned negative. Germany downgraded its 2025 growth forecast to 0%, and the European Commission’s Economic Sentiment Indicator dropped to 93.6 in April, its lowest in over a year¹.

While the short-term impact on European industries is largely disruptive, the current situation could potentially create long-term opportunities. By reducing dependence on U.S. demand and incentivising internal investment, the tariffs may push European firms to strengthen regional supply chains, explore alternative trade corridors, and invest in domestic capacity—moves that could enhance resilience in the long run.

Across sectors, there remains a high degree of uncertainty about the long-term trade environment. While some firms have begun adjusting supply chains or investment strategy, others are holding back, unsure of the final contours of U.S.-EU trade policy.

Carmakers are among the hardest hit so far. Porsche reported a 41% drop in Q1 operating profit, with margins falling to 8.6%². Volvo Cars announced a 60% profit plunge alongside a $1.9 billion cost-cutting plan³. Analysts warn U.S. prices for imported vehicles could rise by $4,000–$12,000 if tariffs persist⁴.

In pharmaceuticals, AstraZeneca is reallocating production from Europe to the U.S. and CEO Pascal Soriot warned that without strategic investment, Europe risks falling behind the U.S. and China in life sciences⁵.

Capital markets are also reacting. DWS reported repatriation of European client assets from the U.S., citing volatility from the new tariffs and comparatively more attractive valuations within Europe⁶.

Meanwhile, SMEs are reassessing international strategies with selected names pausing expansion plans in response to cost uncertainty and unclear policy direction and prompting some to reconsider the viability of North American growth altogether⁷.

With the EU’s 90-day pause on retaliatory tariffs nearing its end, policymakers face urgent choices. European Commission Vice President Valdis Dombrovskis reiterated in late April that while the EU prefers a negotiated solution, it is actively preparing a package of retaliatory measures⁸.

How should European businesses restructure supply chains and trade strategy to remain competitive amid escalating U.S. trade barriers?

Sources: 1. European Commission | 2. 3. 7. Reuters | 4. Business Insider | 5. The Guardian | 6. Financial News London | 8. Financial Times

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