Headlines
European earnings outlook brightens despite US-China tariff escalation
Published by Global Banking and Finance Review
Posted on October 14, 2025
2 min readLast updated: January 21, 2026
Quick Summary
European earnings outlook improves despite US-China tariff escalation, with a forecasted 0.5% increase in Q3 earnings.
European Companies' Earnings Outlook Improves Amid Tariff Concerns
Earnings Outlook Amid Tariff Escalation
By Marleen Kaesebier and Javi West Larrañaga
Current Earnings Estimates
(Reuters) -Analysts are a little more upbeat about European companies' third-quarter results than a week ago, according to the latest estimates compiled by LSEG I/B/E/S, despite the latest flare-up in trade tensions between the U.S. and China.
Impact of US-China Tariffs
European companies are on average expected to report a 0.5% year-on-year increase in third-quarter earnings, the data showed. That is better than the average 0.2% fall predicted a week ago.
Company Responses and Adjustments
It would, however, still be the worst quarterly performance since the first quarter of 2024.
TARIFFS WEIGH ON EARNINGS EXPECTATIONS
On Friday, the U.S. said it would slap an additional 100% tariff on imports from China and impose export controls to China on all critical U.S.-made software from November 1 in a move that has weighed on the pan-European STOXX 600 this week.
Before U.S. President Donald Trump announced his tariff plans in February, analysts were expecting European companies to report 12.5% growth in third-quarter earnings, on average.
Since then, around 72% of companies in Europe, the Middle East and Africa tracked by Reuters have flagged price hikes, as global import taxes have surged.
Third-quarter revenue estimates for European companies listed on the STOXX 600 have also improved from last week, according to the LSEG data. They are now forecast to rise 0.4% year-on-year, against the 0.3% fall expected last week.
Investors will be on alert for any company comments about tariffs, with chipmaking supplier ASML and automaker Volvo AB due to report earnings this week.
On Tuesday, French tyre producer Michelin cut its full-year operating income guidance, citing worse than expected business conditions in the North American market, sending its shares and those of other European car part suppliers down.
That followed similar comments from German automakers Porsche, Mercedes-Benz and Daimler Truck.
(Reporting by Marleen Kaesebier and Javi West Larrañaga in Gdansk. Editing by Milla Nissi-Prussak and Mark Potter)
Key Takeaways
- •European companies' earnings outlook has improved.
- •US-China tariff escalation impacts European markets.
- •STOXX 600 affected by new US tariffs on China.
- •Analysts expect a 0.5% increase in Q3 earnings.
- •Revenue estimates for European companies have improved.
Frequently Asked Questions about European earnings outlook brightens despite US-China tariff escalation
1What is economic growth?
Economic growth refers to an increase in the production of goods and services in an economy over a specific period, often measured by GDP.
2What is the STOXX 600?
The STOXX 600 is a stock index that represents large, mid, and small capitalization companies across 17 European countries, serving as a benchmark for European equity markets.
3What is revenue?
Revenue is the total income generated by a company from its business activities, such as sales of goods and services, before any expenses are deducted.
