LONDON (Reuters) – Europe’s listed companies are expected to generate 1.2 trillion euros (£1.04 trillion) in revenue from the United States this year, highlighting what’s at stake as global trade tensions grow and earnings and economic growth stall.
Analysts and investors say that based on revenues, European companies are more vulnerable to a dispute than their competitors in the United States.
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U.S. President Donald Trump is due to decide by Saturday whether to impose duties on car imports, potentially posing another significant threat to global growth and denting Europe’s prized auto sector.
Washington’s renewed tensions with Beijing may distract Trump and delay a decision beyond the May 18 deadline, or he may crank up his protectionist push with a global trade war on two fronts.
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Last month, he also threatened to impose tariffs on hundreds of European goods, from cheese to ski suits, worth $11 billion.
The impact on Europe’s top firms could be profound — with slowing economic growth and some countries like Italy struggling with bulging budget deficits, the region may not be as resilient to a prolonged dispute as China has so far proven.
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In the past six months, the Chinese government has launched stimulus measures from tax cuts to boosting lending to shore up the world’s No. 2 economy as the trade spat rumbles on.
“I’m much more concerned about trade for Europe than I am for China,” said Christophe Donay, head of asset allocation at Pictet Wealth Management.
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Typically, Europe’s carmakers are considered particularly vulnerable to Trump’s protectionism.
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A 25% tariff could result in a 0.2-0.3 percentage point loss of export revenue and GDP for Germany, according to an analysis by Moody’s. The United States accounts for 13% of Germany’s car exports, the ratings agency has said.
Measured by revenue, there’s a lot at stake...
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