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Eurozone Growth Forecasts Slashed Amid Trump’s Tariff Shock

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Economists have sharply downgraded eurozone growth projections following former U.S. President Donald Trump’s imposition of 20% tariffs on European exports. The sweeping trade barriers have heightened concerns over a global economic slowdown, prompting expectations of accelerated rate cuts by the European Central Bank (ECB), with April now seen as a likely starting point.

Tariffs Trigger Economic Concerns

Trump’s latest trade move has sparked widespread concerns among economists, who warn that the tariffs will hit European consumption and investment while shifting inflation fears to the background. The tariff shock is expected to weigh heavily on trade, business confidence, and foreign investments, increasing the likelihood of stagnation within the eurozone economy.

ABN Amro economists, led by Bill Diviney, anticipate a significant slump in European economic activity. “The EU has been hit with a 20% tariff. We expect this to drive a sharp fall in exports to the U.S. over the coming months, and we are significantly downgrading our 2025 growth forecast as a result,” Diviney stated. The bank now expects near-zero quarterly growth in the short term, with a likely contraction by the third quarter of 2025. However, a recovery is projected toward the year’s end, gaining momentum in 2026.

Bank Forecasts and Inflation Outlook

Bank of America estimates that the U.S. tariffs could reduce global GDP growth by 50 basis points, with the U.S. potentially losing up to 1.5 percentage points, while China and the eurozone face contractions of around one percentage point and 40–60 basis points, respectively.

“For the eurozone, if tariffs remain in place, we anticipate a 40–60 basis point decline in growth over the next few quarters, with the EU likely implementing some form of retaliatory measures,” economist Ruben Segura Cayuela said. However, the inflationary impact of EU retaliation is expected to be minimal, with a 10% tariff hike on U.S. imports raising inflation by only five basis points.

Goldman Sachs analysts, led by Sven Jari Stehn, also revised their projections, warning of increased downside risks. “Our baseline forecast of 0.8% eurozone growth in 2025 already accounted for a total trade-related GDP hit of 0.7%, but the magnitude of Trump’s tariffs raises the likelihood of a technical recession.” The bank now expects the ECB to cut its deposit rate to 1.75% by July, with an April cut deemed “very likely.”

ECB Rate Cuts on the Horizon

The consensus among major financial institutions is that the ECB will respond to the tariff-induced slowdown with aggressive monetary easing. ING’s global head of macroeconomics, Carsten Brzeski, likened the tariffs to a “tsunami,” warning of a prolonged downturn.

“This U.S. tariff move will hurt. Beyond trade, the real concern is its effect on confidence—European consumers and businesses are likely to hold back on spending and investment, keeping eurozone growth at a crawl,” Brzeski said. ING has accordingly lowered its eurozone GDP forecast for 2025 to 0.6% from 0.7% and for 2026 to 1.0% from 1.4%.

With economic headwinds mounting, analysts widely expect the ECB to begin rate cuts in April, potentially ushering in a series of reductions throughout the year to cushion the impact of weakened trade and investment. As uncertainty over global trade tensions intensifies, the eurozone’s economic trajectory remains precarious.

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Strong Demand for Nintendo Switch 2 Pre-Orders Met With Chaos, Potential Tariff Concerns

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Pre-orders for the Nintendo Switch 2 opened in the United States early Thursday and sold out within minutes across major retailers, highlighting massive consumer interest ahead of the console’s official launch on June 5. However, market experts warn that rising geopolitical tensions and new U.S. tariffs on Chinese imports could soon push prices even higher for electronics like gaming consoles.

Retailers including Best Buy, Target, Walmart, and GameStop experienced a surge of traffic overnight, with many customers reporting technical glitches, long wait times, and canceled orders. Listings for the new console — priced at $449.99 (€396.6) — appeared as “out of stock” or “unavailable” within minutes of going live.

GameStop, which offered both online and in-store pre-orders, confirmed overwhelming demand had temporarily disrupted its website. “We’re seeing overwhelming demand for Switch 2, which is causing some site issues,” the company posted on X, formerly known as Twitter. The retailer added it would work to remove duplicate or bot orders to reopen availability, though online inventory was already depleted by Thursday afternoon.

Nintendo acknowledged the “very high demand” and said it is working to fulfill orders through its My Nintendo Store, but warned that delivery by the June 5 launch date is not guaranteed. “The excitement around this online pre-order was incredible,” Walmart said in a statement, confirming that its stock had also sold out quickly.

Pre-orders were initially scheduled for April 9 but were delayed amid growing concerns over new U.S. tariffs. Nintendo cited the need to “assess the potential impact of tariffs and evolving market conditions” before proceeding.

The timing of the Switch 2’s release comes as the electronics industry faces potential price volatility due to trade tensions. President Donald Trump’s decision to implement new tariffs on Chinese goods, combined with retaliatory measures from China, has raised fears of price hikes on a broad range of consumer electronics. Economists warn that gaming consoles could be among the products most affected, given their reliance on international supply chains.

While the new features of the Switch 2 — including a larger screen, interactive chat, and new game titles — justify part of the price increase from the original Switch’s $299 (€263.5), analysts believe tariffs have also contributed to the higher cost.

Nintendo is counting on the Switch 2 to revitalize hardware sales as demand for the original console slows. In February, the company reduced its full-year sales forecast for the Switch to 11 million units, down from an earlier projection of 12.5 million.

With pre-orders now closed, customers will have another opportunity to purchase the Switch 2 on June 5, when it officially hits stores.

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Alphabet Stock Surges After Strong Earnings Driven by Google Search and Cloud Growth

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Shares of Alphabet Inc. soared nearly 5% in after-hours trading Thursday following a strong first-quarter earnings report that beat Wall Street expectations. The tech giant, parent company of Google and YouTube, saw robust growth in its core Google Search advertising business, while Google Cloud recorded a sharp increase in profitability, bolstering investor confidence.

Alphabet reported total revenue of $90.2 billion, marking a 12% increase from the same period last year and surpassing analysts’ forecasts of $89.12 billion. Search advertising remained the company’s largest revenue contributor, bringing in $50.7 billion—a 9.8% year-on-year rise.

Google Cloud, the company’s fastest-growing segment, posted $12.3 billion in revenue, up 28% from a year earlier. While the figure came in slightly below market expectations, operating income more than tripled to $2.18 billion, signaling that Alphabet’s substantial investment in AI infrastructure and cloud technologies is paying off. Chief Financial Officer Anat Ashkenazi noted that demand for cloud services continues to exceed available data center capacity, prompting plans for $75 billion in capital expenditures this year.

CEO Sundar Pichai credited the results to Alphabet’s integrated AI strategy. “We’re pleased with our strong Q1 results, which reflect healthy growth and momentum across the business,” he said in a statement. “Underpinning this growth is our unique full stack approach to AI.”

Alphabet also announced a $70 billion share buyback plan and a 5% dividend hike, lifting its quarterly dividend to $0.21 per share. Despite Thursday’s gains, Alphabet’s stock remains down 16% for the year, impacted by broader tech-sector selloffs linked to tariff concerns.

The company warned that recent changes in U.S. trade policy could impact future advertising revenue. In particular, the end of the de minimis trade exemption—set to take effect May 2—may lead to decreased ad spending by Asia-Pacific retailers, especially Chinese platforms like Temu and Shein.

YouTube, another major revenue stream, posted $8.93 billion in advertising revenue, up 10% from last year, supported by growth in YouTube TV and podcast offerings. Meanwhile, Alphabet’s self-driving car unit, Waymo, generated $450 million in revenue, down 9% and continuing to operate at a loss.

Despite some headwinds, the results underscore Alphabet’s resilience and ongoing transformation into an AI-driven tech powerhouse.

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EV Boom Powers EU Auto Market Amid Broader Industry Challenges

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Electric vehicle (EV) sales in the European Union surged in the first quarter of 2025, helping offset broader weakness in the automotive sector amid ongoing global trade tensions and economic uncertainty, according to data released by the European Automobile Manufacturers’ Association (ACEA).

Between January and March, EV sales rose by 23.9% year-on-year, totaling 412,997 units across the EU. The battery electric vehicle (BEV) market share edged up slightly to 15.2%, compared to 15% at the start of the year.

Three of the bloc’s four largest auto markets—Germany, Belgium, and the Netherlands—led the electric surge. Germany posted a significant 38.9% jump in EV sales, while Belgium saw a 29.9% rise and the Netherlands recorded a 7.9% increase. France, however, bucked the trend with a 6.6% decline in EV sales.

Hybrid-electric vehicles (HEVs) also performed strongly, with sales increasing by 20.7% to reach 964,108 units in the first quarter. France led this segment with a 47.5% spike in registrations, while Spain, Italy, and Germany also reported double-digit growth. HEVs now represent 35.5% of the EU’s car market.

Plug-in hybrid electric vehicles (PHEVs) saw modest growth of 1.1%, buoyed primarily by rising demand in Germany and Spain.

Despite the green energy gains, the overall EU car market experienced a slight setback. New car registrations across the EU declined by 1.9% year-on-year in Q1, with March showing a marginal 0.2% dip. ACEA attributed the slowdown to ongoing global economic pressures and trade-related disruptions affecting supply chains and market confidence.

Traditional fuel segments continued their downward trajectory. Petrol car registrations dropped 20.6% compared to the same period in 2024, with France experiencing the steepest decline at 34.1%. Diesel vehicle registrations plummeted 27.1% across the EU.

Among automakers, Volkswagen Group recorded a 4.8% increase in EU registrations, buoyed by strong demand for its Cupra models. Renault Group also performed well, with a 9.5% rise in registrations. Meanwhile, BMW posted marginal growth of 0.4%, while Mercedes-Benz and Stellantis saw declines of 6.2% and 14%, respectively.

China’s SAIC Motor emerged as a major winner, posting a 52.3% jump in registrations—reflecting growing consumer interest in Chinese EV brands. In contrast, Tesla saw EU registrations plunge by 45% in the first quarter, marking a significant setback for the U.S. electric carmaker in the European market.

Despite the mixed results, the surge in EV and hybrid sales highlights a clear shift in consumer preferences and signals a pivotal moment for Europe’s car industry as it accelerates toward electrification.

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