Uncertainty over US tariff policy weighs on European companies’ outlook

Major European companies are facing turbulence from US tariffs. Despite the recent trade truce between the US and China, investors remain wary as uncertainty persists, Reuters reports.

Meanwhile, according to LSEG estimates, EU corporations’ profits are expected to have grown 1.9% in the first quarter compared to the same period last year, marking a fourth consecutive quarter of their expansion. Excluding the energy sector, the earnings are projected to have surged 7.3%.

Trump’s tariff policies and macroeconomic instability took center stage in corporate reports. Export-oriented companies in the region also pointed to the strengthening euro as a drag on their financial performance. Cyclical sectors faced headwinds, while banks showed resilience, according to Reuters.

Despite a strong first quarter, growing economic uncertainties are forcing many European firms to downgrade their earnings forecasts. As Barclays’ Magesh Kumar Chandrasekaran noted, this level of uncertainty hasn’t been this severe since the early days of the COVID-19 pandemic.