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Germany’s Consumer Confidence Improves Slightly Amid Economic Challenges

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Germany’s GfK Consumer Confidence Index registered a slight improvement for January, rising by 1.8 points to -21.3 from December’s -23.1, according to the latest report from GfK. Although the figure surpassed market expectations of -22.5, it remains well below pre-pandemic levels, reflecting ongoing consumer pessimism in Europe’s largest economy.

The modest uptick was attributed to a recovery in income expectations and a slight rise in the willingness to buy. Income expectations climbed by 4.9 points to 1.4 in December, bouncing back from a significant 17-point drop in November. Similarly, the willingness to buy improved marginally by 0.6 points to -5.4. However, the willingness to save declined sharply, dropping six points to 5.9, indicating reduced consumer caution toward spending.

Rolf Bürkl, a consumer expert at the Nürnberg Institute for Market Decisions, described the situation as fragile. “The consumer climate remains at a very low level,” he said. “A sustained recovery in consumer sentiment is not yet in sight, as consumer uncertainty is still too high. The main reason is high food and energy prices. In addition, concerns about job security are growing in many sectors.”

Economic expectations for January showed little improvement, edging up to 0.3 from December’s -3.6. Analysts have warned that macroeconomic challenges, including high inflation and weak growth, will continue to weigh on sentiment. Leading economic research institutions, including the ifo Institute, have forecast near-stagnant growth for 2025 following a slight contraction expected in 2024.

European Markets Slide Amid Hawkish Fed Signals

The DAX index fell 0.9% to around 20,000 points on Thursday, marking its fifth consecutive session of losses. Infineon AG led the decline, dropping 3.5%, followed by Vonovia AG (-2.4%) and Continental AG (-2%). In contrast, MTU Aero Engines AG and Rheinmetall AG outperformed, gaining 0.8% each.

European equities mirrored the DAX’s downward trend, as hawkish signals from the U.S. Federal Reserve added to investor concerns. The Euro STOXX 50 fell 1.1%, France’s CAC 40 dropped 1.2%, Italy’s FTSE MIB declined 1.3%, and Spain’s IBEX 35 slid 1.6%. Among the biggest losers, Dutch semiconductor giant ASML Holding tumbled 3.9%, while Banco Santander and Vivendi fell 2.9% and 2.7%, respectively.

The Fed’s decision to raise inflation expectations for 2025 to 2.5% from 2.1% and signal a slower pace of rate cuts has heightened investor caution. Fed Chair Jerome Powell emphasized a “new phase” of monetary policy, with projections for only two rate cuts in 2025, down from the four anticipated earlier.

“The Fed is going to be much more cautious next year,” said Chris Turner, an economist at ING Group. “Sticky inflation and President Trump’s policy mix mean a higher hurdle to justify rate cuts in 2025.”

The Fed’s stance, combined with Europe’s sluggish growth and ongoing tariff concerns, has deepened risk aversion among investors, further pressuring European markets.

 

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Trump’s Auto Parts Tariffs Threaten Global Car Industry, Warns CLEPA

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The global automotive supply industry is facing significant challenges following the implementation of a 25% tariff on foreign-made cars imported into the U.S. and the upcoming 25% levy on imported auto parts, which will take effect on May 3. These tariffs, announced by U.S. President Donald Trump, are expected to have far-reaching consequences for the car industry, leading to potential job losses, plant closures, and a decrease in investment across the sector.

Euronews spoke with Benjamin Krieger, Secretary General of the European Association of Automotive Suppliers (CLEPA), who outlined the potential impact of these tariffs on the global auto supply chain. CLEPA serves as a key link between European automotive suppliers and policymakers.

Krieger emphasized that the tariffs could severely increase production costs for automotive suppliers, many of whom operate in a highly integrated global market. “The industry is very globally connected, with European suppliers often investing in manufacturing facilities across the U.S., Europe, Canada, Mexico, and Asia. Components frequently cross multiple borders, and tariffs on these goods will raise costs, which are often absorbed by the automotive suppliers,” Krieger explained.

This increase in costs poses a serious threat to the competitiveness of the industry. With already slim profit margins, suppliers may face difficult decisions, including scaling back investments or even closing factories, leading to potential job losses. “The additional pressure will certainly result in factory closures and job losses,” Krieger warned.

As the tariffs target not just finished cars but also essential auto parts, they are likely to disrupt the industry’s delicate balance. “For suppliers, we either have to relocate production, abandon investments made in recent years, absorb the cost, or lose market share. There’s no ideal solution,” Krieger said, highlighting the tough choices ahead for suppliers.

Krieger also expressed concerns that the tariffs could reverse the progress made in the automotive sector over recent decades. “There’s a real risk that we could lose the gains we’ve built in the last decades,” he added, stressing the long-term damage these tariffs could inflict on the global automotive supply chain.

In response to the tariffs, Krieger suggested that the European Union must provide clear guidance on how to move forward. “We need clarity on the tariffs being applied and their implications for our trade relationships. Understanding the impact will help us quantify the problem and determine the effects on different European countries,” he said.

He also called for the EU to strengthen the competitiveness of its own auto supply industry. Countries like Germany, which have thriving automotive sectors, may be hit hardest by the U.S. tariffs, and will likely seek new markets to offset losses. “I hope for a measured response from the EU. It’s important that we show unity and pursue agreements with the U.S. while also prioritizing our strategic independence,” Krieger said.

As the situation unfolds, the automotive supply industry faces uncertain times, with both the U.S. tariffs and the EU’s response set to shape the future of the global car industry.

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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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Amazon Makes Surprise Bid for TikTok as US Ban Looms

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Amazon has submitted a last-minute bid to acquire TikTok, a Trump administration official confirmed on Wednesday, as the deadline for a US ban on the popular social media platform approaches. The offer was made in a letter addressed to Vice President JD Vance and Commerce Secretary Howard Lutnick, according to an official who spoke on condition of anonymity.

The bid was first reported by The New York Times, coming just days before the deadline for TikTok’s Chinese parent company, ByteDance, to sell the platform to an approved buyer or face a ban in the United States. While President Donald Trump has suggested he may extend the deadline, he has also indicated that he expects a deal to be finalized by Saturday.

Possible Investors in TikTok

Amazon’s interest in TikTok adds another player to an already competitive field of potential buyers. Among the companies that have expressed interest in acquiring TikTok’s US operations are Oracle and Blackstone. Oracle, which secured a 12.5% stake in TikTok Global in 2020, has long been seen as a leading contender, given its role as the app’s cloud technology provider.

In January, AI startup Perplexity AI proposed a merger with TikTok’s US division, suggesting it could rebuild the platform’s algorithm while avoiding monopoly concerns. The company emphasized its commitment to maintaining American oversight and data security in a blog post outlining its vision for TikTok’s future.

Other potential buyers include a consortium led by billionaire Frank McCourt, who recently brought on Reddit co-founder Alexis Ohanian as a strategic adviser. The group has reportedly offered ByteDance $20 billion in cash. Meanwhile, Employer.com founder Jesse Tinsley has assembled a competing consortium and is said to be offering over $30 billion. Additionally, Wyoming entrepreneur Reid Rasner has reportedly submitted a bid worth approximately $47.5 billion.

Concerns Over National Security

TikTok’s future in the US remains uncertain due to national security concerns raised by American officials. Both the FBI and the Federal Communications Commission have warned that ByteDance could potentially share US user data with the Chinese government. However, TikTok has repeatedly denied these claims, stating it has never provided data to Chinese authorities and would refuse to do so if asked. To date, the US government has not presented concrete evidence supporting the allegations.

Trump’s relationship with TikTok has been complex. Although he has millions of followers on the platform and has credited it with helping him connect with younger voters, his administration has also pushed for restrictions on the app. During his first term, he issued executive orders targeting both ByteDance and Chinese messaging app WeChat, citing security concerns.

With the deadline for TikTok’s fate rapidly approaching, all eyes are on ByteDance and the US government to determine whether Amazon’s bid—or another offer—will secure the platform’s future in the United States.

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