EU trade war: Which sectors are weathering the Trump storm?”

EU trade war: Which sectors are weathering the Trump storm?”

The European stock exchanges are currently showing nervousness due to an impending trade conflict between the EU and the USA. This comes from a report by Market screener out. US President Donald Trump recently threatened a 50% tariff surcharge on EU imports, a move that was originally due to take effect from June 1st. However, the measure was postponed until July 9th at the request of EU Commission President Ursula von der Leyen.

Among the targeted sectors that could suffer from this looming tariff increase, industry, consumer discretionary, technology, and banking and insurance stand out. These industries are heavily dependent on global trade and are facing significant pressure on their margins due to additional tariffs. Companies such as Siemens, Airbus, LVMH and Volkswagen, which are already complaining about declining willingness to consume and high levels of uncertainty, are particularly affected.

The resilient sectors

In contrast, some sectors are proving resilient to the economic turbulence. Food and consumer staples manufacturers such as Nestlé, as well as the tobacco industry with companies such as British American Tobacco and Imperial Brands, benefit from stable margins and recurring revenue. Utilities such as Iberdrola and National Grid as well as the real estate industry, represented by companies such as Vonovia and Castellum, also show a low correlation to world trade.

In addition to market uncertainty, the looming trade conflict could have significant impacts on various industries. The automotive industry in particular has to prepare for declines. Loud Industrie.de German manufacturers such as BMW, Mercedes-Benz and Volkswagen face export losses of up to 7.1 percent in the event of tariffs. Spanish and French car manufacturers expect moderate declines of 2.4 and 2.3 percent respectively. In contrast, Renault is hardly affected due to its small presence in the USA.

Impact on other industries

The chemical industry could also suffer significantly from future tariffs. Manufacturers like BASF, which have significant production facilities in the US, face the challenge of losing market share if the tariff on chemical products reaches up to 20 percent. The reintroduction of tariffs on crude steel and aluminum imports could also reignite the trade conflict with the EU, as EU exports worth 6.4 billion euros were affected in 2018.

Given these signs, European decision-makers have already responded with a dual strategy. This consists of both diplomatic efforts and possible countermeasures. This includes comprehensive negotiations on new trade agreements with countries such as Switzerland and Mexico, as well as consideration of targeted retaliatory tariffs on sensitive US products.

In order to meet the challenges of the impending trade conflict, experts advise companies to optimize their risk minimization strategies. This includes setting up specialized teams, monitoring policy developments and conducting detailed supply chain analysis. By diversifying and reviewing existing trade agreements, companies could also secure their competitiveness and cushion possible tariff burdens.