The European Central Bank (ECB) reported that discussions were held with representatives from 79 leading companies in the Eurozone between March 17 and March 26, prior to the announcement of new tariffs by former U.S. President Donald Trump on March 26 and April 2.
“Many business service providers, including employment, IT, and consultancy services, mentioned that clients are postponing major projects due to the current uncertainty regarding tariffs,” stated the ECB.
Demand for passenger vehicles is currently stagnating and is projected to remain low or show only moderate growth in the short term, according to major companies in the Eurozone. However, the ECB noted that the heavy vehicle industry is gearing up to increase production later this year.
Producers of other transport equipment are maintaining strong production levels in order to fulfill substantial order backlogs.
Many companies are adopting a wait-and-see approach regarding the impact of tariffs or are skeptical about their implementation and duration, based on the findings of these discussions. Firms also believe that the tariffs will have adverse effects on U.S. consumers and are unlikely to encourage significant investments in the U.S., as companies will be hesitant to make long-term decisions.
“The primary impact of recent tariff announcements has been to cause companies to suspend certain investments and reassess their reliance on U.S. production factors,” according to the ECB.
Companies that have reconsidered their outlook in light of current or anticipated tariffs expect a reduction in activity and, overall, higher prices, warned the monetary institution.
Regarding the announcement of increased defense spending in Germany and across the European Union (EU), businesses anticipate it will have a positive impact on economic activity.
