FRANKFURT (Reuters) – Euro zone manufacturers are more worried about cheap imports from China than tariffs from the United States, a European Central Bank survey showed on Friday.
Only half of the manufacturers contacted by the ECB in a regular poll thought their business in the euro area would be affected by U.S. tariffs.
Many pointed out they were already producing “local for local” and some were only exporting highly sophisticated, hard to substitute products to the United States.
The “overriding concern”, however, was about the indirect impact, with more imports coming to the European Union from China if trade with the United States is curtailed.
“In the absence of protective EU measures, this led more contacts to expect a negative effect on prices in their sector in the euro area than a positive one,” the ECB said.
“In the event of protective measures and retaliation leading to a more generalised tariff war, it was much more likely that costs and prices would rise.”
The quarterly telephone survey also showed manufacturers were laying off staff or hiring fewer as they tried to cut costs. It pointed to stable prices in manufacturing and at most moderate increases in services.
These were all elements that likely cemented the central bank’s decision to cut rates on Thursday.
The ECB contacted 82 large companies that operate in the euro area outside of the financial sector between 6 and 14 January 2025.
(Reporting by Francesco Canepa; editing by Philippa Fletcher)
