Current Forces of Debt Finance in Europe -
The European Debt Finance market faced a complex landscape in Q1 2025, influenced by global trade tensions, evolving fiscal policies, and shifting interest rates.
Impact of U.S. Tariffs -
In March, the United States imposed a 25% tariff on all car, steel and aluminium imports and a 10% global tariff on most other imports with implementation delayed by 90 days. The steel and aluminium tariff increased to 50% on June 4 and the 10% tariff is set to increase to 20% for the European Union on July 9. The tariffs are likely to significantly affect Germany, the world’s largest exporter of automobiles. Overall, roughly €380 billion worth of products made in the EU are expected to be affected. German banks, particularly those with exposure to exportdriven sectors like automotive experienced increased pressure. Analysts warned that the tariffs could lead to higher loan losses and reduced profitability due to the anticipated economic slowdown and shifts in global trade flows. The banking sector’s vulnerability was underscored by a significant sell-off in bank stocks, which fell nearly 16% following the tariff announcements.
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