FRANKFURT: Europe&#39;s economy is holding up better than expected in the face of US President Donald Trump&#39;s new tariffs &mdash; in part because the European Union didn&#39;t retaliate with self-defeating tariffs of its own, the head of the European Central Bank said Tuesday. Christine Lagarde said the impact of Trump&#39;s trade war on growth and inflation in the 20 countries that use the euro currency had also been softened by a stronger euro and by the conclusion of a trade deal with Trump. The agreement capped tariffs at 15% and took away the uncertainty that threatened to delay or disrupt business investment. &ldquo;A year ago, most would have assumed that US tariffs ... would trigger a major adverse shock to the euro area economy,&rdquo; Large said in a speech delivered at a central banking conference in Helsinki, Finland. &ldquo;Yet some of these assumptions have not been borne out.&rdquo; There had been little impact on inflation, she said, and effects on growth have been &ldquo;relatively moderate&rdquo; due to European governments taking pro-growth measures in response. The European Union&#39;s executive commission prepared a list of goods to hit with retaliatory tariffs, or import taxes, but suspended them once the tariff deal was struck between Trump and Commission President Ursula von der Leyen in July. The reasons for nonretaliation included pressure from business groups not to get into a prolonged cycle of tit-for-tat tariff increases, as well as concerns about jeopardizing US support for Ukraine. As a result, Europe continued to receive the imported raw materials and goods it needed for its economy without hindrance from high tariff costs or bottlenecks that could raise prices. &ldquo;As a result, we have not yet seen significant supply chain disruption,&rdquo; Lagarde said. &ldquo;Global supply chain pressures remain contained, and in the euro area, bottleneck indicators are close to historical averages.&rdquo; Trump&#39;s policies have been accompanied by a fall in the dollar and a corresponding strengthening of the euro. That makes Europe&#39;s imports cheaper and helps the ECB in its efforts to contain the annual rate of inflation, which was a moderate 2% in August. The EU and its member governments have taken additional measures to strengthen growth, including free trade agreements with the South American Mercosur countries &mdash; Argentina, Brazil, Bolivia, Paraguay, and Uruguay &mdash; and with Mexico. National governments have increased defense spending due to the perceived threat from a newly assertive Russia. At the same time, Germany has committed to large-scale investment in roads, rails, and bridges after years of underspending. Nonetheless, growth remains mediocre, coming in at only 0.1% in the second quarter compared to the previous quarter. Tariffs and the associated uncertainty will still reduce the growth rate by approximately 0.7 percentage points through 2025 and 2027.

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ECB chief Christine Lagarde said Europe’s economy has withstood Trump’s tariffs better than expected. A trade deal, stronger euro, and pro-growth measures limited inflation and disruption, though growth remains weak and tariffs will weigh modestly until 2027.

Europe's top central banker says economy holding up better than expected

Reuters

BERLIN: German sandal maker Birkenstock raised its expectations for fiscal year 2025 revenue on Thursday, driven by demand for its clogs and shoes from affluent shoppers despite price hikes.&nbsp;Demand for trendy and aspirational products such as Birkenstock&#39;s pricey sandals, popular prams from Bugaboo, as well as Coach&#39;s Tabby handbags, has remained undeterred from higher-income consumers in the United States, even as tariffs and sticky inflation weigh on budgets in lower-income households.&nbsp;Birkenstock has been increasing prices to mitigate the impact of a 15% US tariff on European imports, but demand has been strong for its products, including the suede leather closed-toe Boston clogs, which are priced as high as $275 online.&nbsp;The company, whose shares were up about 6% in premarket trading, now expects sales of at least 2.09 billion euros ($2.45 billion), implying growth of about 17.5% at constant currency rates over last year.&nbsp;The New York-listed sandal maker had previously said it expects full-year revenue growth at the higher end of its forecast range of 15%-17%.&nbsp;At least 520 million euros of sales are set to be recorded in the fourth quarter, which typically ends in September, an 18% growth year-on-year for the three months, Birkenstock said. Full-price demand for its products contributed to a profit beat in the third quarter reported in August.&nbsp;The company, which manufactures 95% of its shoes in Germany, has also sought to make its factories and logistics more efficient and reduce production costs to manage the fallout from the tariffs.&nbsp;On Thursday, the company said it had acquired a production facility near Dresden, Germany, for 18 million euros to boost its manufacturing capacity. The site is expected to be operational by the end of fiscal 2027.&nbsp;Birkenstock maintained its target of 31.3% to 31.8% growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year ending September 30.($1 = 0.8514 euros)

Birkenstock footwear, Birkenstock sandals, Birkenstock stocks

The company expects sales of at least 2.09 billion euros ($2.45 billion), implying growth of about 17.5% at constant currency rates over last year.

Birkenstock lifts sales outlook on demand boost for clogs and shoes

FRANKFURT: Euro zone economic growth continues to hold up as Germany&#39;s budget largesse props up sentiment and offsets turmoil in France, but more weakness may be ahead as US tariffs start to exert their full effect, key data showed on Tuesday.&nbsp;The euro zone has been expanding quicker than economists had expected this year, sparking debate over whether the bloc is simply more resilient than thought and how much damage French political turmoil will do across the 20 nations.&nbsp;Seemingly adding to the resilience case, the HCOB flash composite Purchasing Managers&rsquo; Index (PMI) edged up to 51.2 in September from 51 in August for its ninth consecutive month of growth.&nbsp;Germany carries Euro zoneBut the underlying trend was mixed and suggested that the industrial rebound may be fizzling out, leaving services to support growth.&nbsp;&quot;The details are not as rosy as the headline index suggests,&quot; Oxford Economics&#39; Riccardo Marcelli Fabiani said.&nbsp;&quot;Sentiment was soft and incoming orders from abroad continued worsening, pointing to no strong rebound happening after the drop in exports following the introduction of tariffs,&quot; he said.&nbsp;Another concern is that the steady improvement in PMI figures is solely attributable to Germany, where fiscal expansion is likely to drive growth for years to come.&nbsp;&quot;France stands out negatively,&quot; ING economist Bert Colijn said. &quot;With heightened political uncertainty, the French economy appears to be mirroring this sense of instability.&quot;&nbsp;Germany&#39;s PMI bounced to a 16-month high of 52.4, beating poll expectations for a modest lift to 50.6 from 50.5. But in France, activity contracted for a 13th month and at the fastest pace since April, with its PMI falling to 48.4.&nbsp;Echoing the euro zone number, British firms also reported a loss of momentum and confidence as the PMI slowed to 51 in September from 53.5 in August.&nbsp;Full brunt of Trump tariffs still to comeThe euro zone is still to take the full hit from US tariffs, which will slow its already modest growth rate even further, the Organization for Economic Cooperation and Development said in a separate report.&nbsp;&quot;The full effects of tariff increases have yet to be felt &mdash; with many changes being phased in over time and companies initially absorbing some tariff increases through margins &mdash;&nbsp;but are becoming increasingly visible,&quot; the OECD added.&nbsp;This will slow euro zone growth to just 1.0% next year from 1.2% this year, as increased trade frictions and geopolitical uncertainty negate the boost from lower ECB interest rates and Germany&#39;s fiscal expansion.&nbsp;Growth in the UK is also expected to drop to 1.0% next year from 1.4% in 2025 on a tighter fiscal stance, higher trade costs and greater uncertainty.&nbsp;&quot;Fiscal expansion is expected to boost economic activity in Germany, but expected consolidation in both France and Italy will dampen growth,&quot; the OECD added.&nbsp;However, the OECD confirmed the ECB&#39;s view that inflation will now hold at or just below the 2% target, which will keep alive hopes for more policy easing, especially as consumption growth softens.

Europe

The OECD says the full impact of the tariff slowdown is yet to be felt. It predicts a broader growth slowdown, with French unrest likely to weigh on the economy, while increased German spending may offer some support.

Europe to succumb to slowdown driven by tariffs, French turmoil: Reports

KUALA LUMPUR: A large but loose Asian trade bloc that includes China, the Regional Comprehensive Economic Partnership, will consider adding new members and finding ways to boost trade when its leaders meet next month, the Malaysian hosts said on Monday.&nbsp;Malaysia plans to hold a summit of the RCEP, the world&#39;s largest trade bloc, when it hosts the annual gathering of the Association of Southeast Asian Nations in Kuala Lumpur.&nbsp;Leaders of the RCEP - which includes all 10 ASEAN members as well as China, Japan, South Korea, Australia and New Zealand - have not held an official meeting since November 2020, when they signed a trade deal aimed at lowering tariffs, boosting investment and allowing freer movement of goods.&nbsp;The RCEP is seen as a potential buffer against tariffs imposed by US President Donald Trump&#39;s administration, though its provisions are considered weaker than some other regional trade deals due to competing interests among members.&nbsp;The October meeting will let members suggest improvements to the RCEP trade deal and consider requests from some countries to join, Malaysia&#39;s trade minister Tengku Zafrul Aziz told Reuters in an interview ahead of a meeting of ASEAN economic ministers this week.&nbsp;He declined to provide details on potential changes or name countries that have applied to join, citing confidentiality. But he said he was optimistic the RCEP can be &quot;more relevant and current&quot;.&nbsp;Malaysian minister: Meeting will not be &lsquo;hijacked by China&rsquo;China has called on countries in the region to embrace multilateral frameworks such as the RCEP to counter the impact of the US tariffs.&nbsp;Tengku Zafrul said he was not worried about the meeting being &quot;hijacked&quot; by China, as ASEAN and RCEP members agreed on multilateralism and were committed towards engaging with others, including the United States.&nbsp;&quot;To be fair to Malaysia and ASEAN member states, and even other RCEP members, they have said the same thing. I mean, Korea, Japan, New Zealand, Australia and all have stated their views on multilateralism,&quot; he said.&nbsp;&quot;So, whether China will hijack the agenda: I don&#39;t think so, because there&#39;s nothing new in our belief about that principle.&quot;&nbsp;Trump&#39;s tariff drive has seen levies of between 10% and 40% placed on goods from Asian countries, with the majority of major ASEAN economies levelled with a rate of 19%.&nbsp;The US tariffs are expected to be a key point of discussion during the ASEAN ministers&#39; gathering this week, which will be attended by US Trade Representative Jamieson Greer.&nbsp;Tengku Zafrul said the ASEAN meetings will let the bloc discuss key issues with both the United States and China, the region&#39;s two largest trade partners.

Malaysia plans to hold a summit of the RCEP, the world's largest trade bloc, when it hosts the annual gathering of the Association of Southeast Asian Nations in Kuala Lumpur.


Articles tagged with "US tariffs"

Europe's top central banker says economy holding up better than expected

Birkenstock lifts sales outlook on demand boost for clogs and shoes

Europe to succumb to slowdown driven by tariffs, French turmoil: Reports

China-backed Asian trade bloc looks to expand, upgrade deal