𝐓𝐫𝐮𝐦𝐩’𝐬 2025 𝐓𝐚𝐫𝐢𝐟𝐟𝐬 𝐒𝐡𝐚𝐤𝐞 𝐄𝐮𝐫𝐨𝐩𝐞𝐚𝐧 𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬: cont’d

Corporate unease is growing as the US-EU trade dispute escalates. European firms from Nestlé to Mercedes-Benz and Unilever cite policy unpredictability as a top-line risk, with disrupted supply chains and weakened consumer confidence reported in recent earnings. Stellantis and Volvo have withdrawn guidance altogether¹.

In Brussels, EU officials warn that up to 97% of EU exports to the US could face tariffs if sector-specific probes expand. The bloc has paused retaliatory measures until July 8, but Trade Commissioner Maroš Šefčovič confirmed that “all options remain open” if negotiations fail².

The ECB’s March 2025 consumer survey showed that approximately 44% of eurozone consumers are willing to shift their spending away from U.S. products if tariffs are imposed. Additionally, boycotts of U.S. goods, including whiskey and travel, have gained visibility, with some consumers actively switching to domestic alternatives. Substitution trends suggest a potential long-term shift in purchasing patterns, particularly among high-income households.

On the American side, Goldman Sachs CEO David Solomon has warned that tariff-driven uncertainty may not be 'healthy for investment and growth', though still seeing positives in 'breaking down some of the regulatory barriers', among others. Goldman now sees US GDP at 1.3% for 2025 and puts the recession risk at 45%. M&A activity is already down 13% in Q1⁴. Meanwhile, Wall Street earnings forecasts show deep downside risk in the event of a prolonged trade stand-off.

Debt capital markets seem to confirm the overall volatility. The iTraxx Crossover index eased from ~420bps of early April⁵ (its highest in 18 months) to ~330bps of early May. Yet, outlook remains uncertain as trade-exposed sectors like autos and manufacturing continue to reprice, and several issuers have delayed issuances in response to investor caution.

Brussels has floated a €50bn offer to increase US imports — mainly LNG and agri — but insists a 10% blanket tariff is not a “fair basis” for resolution⁶.

Can diplomacy defuse a standoff that’s already reshaping strategy, sentiment, and solvency risk?

Sources:
1. https://lnkd.in/dVPfR49A
2. https://lnkd.in/dAWtUjST
3. https://lnkd.in/dZUXX9fe
4. https://lnkd.in/d-npMb-i
5. https://lnkd.in/d5vTgYG2
6. https://lnkd.in/dKgmnCgv

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