Nearly 60% of German firms expect EU-US deal to burden them more, finds DIHK

A survey by the German Chamber of Commerce and Industry (DIHK) reveals that nearly 60% of German companies, increasing to 74% for those with direct U.S. business, anticipate increased burdens from the new EU-U.S. trade deal, citing expected higher tariffs, including a 15% tariff on most EU goods, and bureaucracy. DIHK chief Helena Melnikov described the agreement as a 'bitter pill' due to lingering uncertainty, prompting almost two-thirds of German firms to seek stability in alternative markets, particularly within the European single market, to mitigate the current policy's negative effects.

Analysis

A German Chamber of Commerce and Industry (DIHK) survey of 3,500 firms indicates significant negative sentiment towards the new EU-U.S. trade deal, creating potential headwinds for the German economy. Nearly 60% of companies, and a higher 74% of those with direct U.S. business, expect increased burdens from higher tariffs and bureaucracy. The introduction of a 15% tariff on most EU goods is a specific concern, with 80% of firms with U.S. exposure citing new tariffs as their main worry. This sentiment, described as a 'bitter pill' by the DIHK's chief executive, is not just a perception issue; it is driving a strategic reorientation. Almost two-thirds of German companies are actively shifting their focus to new markets, with a clear preference for the stability of the European single market. This suggests a defensive pivot by a core segment of the European economy to mitigate uncertainty and rising costs, potentially altering transatlantic trade flows and investment priorities.

Key Decisions for Investors

• Investors should scrutinize portfolios for exposure to German and EU export-oriented companies heavily reliant on the U.S. market, as they face direct margin pressure from the impending 15% tariff and increased operational friction.
• Consider increasing allocation to companies with a strong commercial focus within the European single market, as they may benefit from the strategic capital and trade flow redirection away from the U.S.
• Monitor ongoing EU-U.S. trade negotiations closely, as any official improvements or further deteriorations to the agreement will serve as a significant catalyst for European equities with transatlantic business operations.