Trump Tariffs: Europe's Export Market Under Pressure

European stock markets appear tense as the US elections approach. Analysts at investment bank Barclays, led by Emmanuel Cau, report that investors are already preparing for a Donald Trump victory. The prospect of tariffs proposed by Trump has led to European export companies lagging the Stoxx Europe 600 by 15% since the spring. The issue of tariffs is a central element of Trump's election platform, and the fear of trade barriers is significantly weighing on European market activity. Should Trump's proposals come to fruition and escalate into a full-blown trade war, earnings per share (EPS) growth for affected sectors, particularly in Germany, Italy, and the capital goods, automotive, beverages, technology, and chemical industries, could be notably pressured. A small silver lining: some European companies have, since 2018, relocated parts of their production to the US, which could somewhat mitigate the impact on the entire market. Nonetheless, the risk of negative side effects remains high. Furthermore, Barclays warns that Europe could face the phenomenon of stagflation if a trade war were to escalate. The US would also suffer, with a projected 3.2% decline in earnings per share in the S&P 500 due to the new tariffs, particularly in the materials, consumer goods, industrial, technology, and healthcare sectors. However, should Kamala Harris come to power, a more positive trend is expected, especially for the clean and renewable energy sector in Europe, which has been weakened by the prospect of a Trump victory.