Trump’s Tariffs Cloud An Upbeat European Earnings Season

The prospect of US trade tensions is overshadowing an otherwise strong earnings season for European companies, Sagarika Jaisinghani reported for Bloomberg News.

Since Trump’s reelection in November, European investors have been on high alert as he has threatened sweeping global tariffs to pressure companies to shift production to the United States.

So far, companies listed on the Stoxx Europe 600 Index have exceeded fourth-quarter profit estimates by an average of 4% on an equal-weighted basis, well above historical norms, according to Goldman Sachs Group Inc.

However, despite this positive earnings momentum, full-year 2025 earnings projections have been revised downward by 0.5% since the beginning of the year.

Analysts attribute much of this pessimism to fears surrounding trade tariffs.

“Concerns about potential trade tariffs are likely behind some of the recent earnings downgrades,” wrote Lilia Peytavin, a Goldman Sachs strategist, in a note last Friday. She added that industries most vulnerable to tariffs—including basic resources, automobiles, and chemicals—have seen the sharpest earnings reductions.

Since Trump’s reelection in November, European investors have been on high alert as he has threatened sweeping global tariffs to pressure companies to shift production to the United States.

Industries such as European automakers and mining firms, which have significant overseas sales, are particularly exposed to these potential trade barriers.

Trump recently announced plans to introduce new tariffs on imported automobiles starting in April.

The next day, he ordered his administration to develop reciprocal tariffs aimed at offsetting foreign trade barriers, including non-tariff obstacles such as regulations, value-added taxes (VAT), and currency exchange policies.