The EU may reach a trade deal with the US by the end of this month, aiming to establish a "minimum - tariff reciprocal framework" to avoid the 10% benchmark tariff proposed by Trump. However, specific exemption clauses are still being negotiated. This stalemate is having a significant impact on the European economy.
European corporate earnings expectations have turned from growth to decline. LSEG data shows that the profit forecast for European companies in Q2 has dropped from + 0.6% a week ago to - 0.2%, deteriorating significantly compared with + 9.1% before Trump's tariff policy in February. The revenue forecast has also been adjusted down to - 3.0%. There is a significant industry - wide divergence, with Irish and Polish companies expecting strong growth, while German and Norwegian companies face declines. The STOXX 600 index's 7.1% year - to - date increase deviates from the fundamentals, indicating insufficient pricing of trade risks.
In terms of macro - economic dynamics, the French central bank announced a slight 0.1% GDP growth in the second quarter. Although the 2025 growth forecast is maintained at 0.6%, the spirits industry has been significantly impacted by tariffs, and extreme heat has curbed catering consumption. Trade uncertainty continues to suppress business investment. The EU estimates that if the US "reciprocal tariffs" are fully implemented, the annual operating costs of European enterprises may increase by 18 billion euros. The earnings report of auto - giant Stellantis this week will be a barometer of the industry.
