Increased prices, interrupted supply chains, and wavering exports are some of the constraints Europe’s major companies are facing due to President Donald Trump’s trade war, raising red flags of how pressure in the world economy could affect Europe’s commerce.
Though firms like BMW, Volkswagen and Siemens reported better earnings in the recent week, they are still afraid Trump’s aggressive attitude on trade may bring a new swarm of new risks, which are already slowing down growth according worldpay reviews UK
President Trump’s tariffs have not only hiked the costs of critical raw materials, e.g., steel but also affected trade worldwide and deformed the multifaceted international supply model that small companies depend on.
Europe is currently feeling the pinch, and, along with other risks like massive debts (from Greece and Italy) and the possible exit of Britain from the EU, the region’s economy may soon go into a strain.
Other than the direct impact of Trump’s policies, studies across the US and Europe reveal that most businesses are worried about the flimsy agreement signed towards the end of July between Mr. Trump and Europe— a region he had called “a foe” only a few weeks before.
This kind of fear may push executives to delay or cancel investments in expansion or new equipment thereby stunting companies like Siemens.
Siemens CEO Joe Kaeser pointed out that “all the noise surrounding regional trade ties may scare away” the customer’s confidence.
“Trust is the pillar for Business and Investment,” Mr. Kaeser said in a report in which Siemens announced a drop in their quarterly profits that helped contributed to slumping of the firm’s shares to almost 5 percent.
Despite a last week treaty decoration by the White House, US tariffs on European aluminum and steel imports remain effective. Plus the Continent stays in the dilemma of the aggravating US-China trade dispute.
Companies in Europe may face collateral damage in the trade war. For example, BMW already raised the prices of Sub Utility Vehicles shipped out to China from its Spartanburg, S.C factory. The German-based car-maker is forwarding the extra cost from the tariffs China imposed on US products in reprisal for President Trump’s taxes on Chinese products.
Should the trade wars persist, some firms may start moving production to “safer” regions to avoid tariffs. For instance, BMW recently tipped-off that it would evade the levies by transferring some of its production operations to China, but the company hasn’t acted yet.
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