German Sentiment Dives On Trump Tariff Angst
- Written by: Sam Coventry
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Investor sentiment in the Eurozone and Germany fell notably in November in response to Donald Trump’s election and the prospect of U.S. tariffs, which are expected to hit Europe's already struggling manufacturing sector.
The ZEW survey measures investor sentiment regarding the current state of the economy and the outlook, making it one of Europe's most timely and closely followed surveys.
"While weakness was registered in both the current conditions and expectations components, the expectations component fell by more in both Germany and the euro area, underscoring that the negative economic impact from US tariffs will be felt only next year," says Andrzej Szczepaniak, an economist at Nomura.
Germany's current situation deteriorated to -91.4 in November from -86.9. This was worse than the -86 that the market was expecting.
The forward-looking economist sentiment reading deteriorated to 7.4 in November from 13.1, which was also well below expectations for 12.8.
The survey covering the Eurozone also deteriorated, although it was less downbeat. The ZEW economic sentiment reading fell to 12.5 from 20.1, which was a big miss on the 20.1 that analysts were expecting.
"The gap between Euro area and German investor sentiment widened further; we believe that Germany is likely to be more acutely affected by US tariffs than other euro area member states," says Szczepaniak.
Economists at Nomura estimate that U.S. tariffs will reduce euro area GDP growth by a minimum 0.3pp cumulative over 2025-26.
President Donald Trump looks set to impose a 10% blanket import tariff, which will weigh heavily on big exporters, such as China and the EU.