The European Central Bank (ECB) released its latest Economic Bulletin on Friday.
U.S.-based multinational companies (MNEs) play a significant role in the euro area economy. These companies either export directly from the U.S. or operate through their branches (affiliates) in the euro area.
The Bulletin noted that ongoing trade tensions — such as tariff increases or policy uncertainty — could impact their business.
These tensions might raise costs, disrupt internal company trade, or force changes in how companies handle taxes.
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U.S. MNE affiliates in the euro area contribute more than 5% to the region’s total economic output, profits, and business spending and employ about 2% of the workforce; and the figures are higher in Ireland.
In early 2025, euro area exports rose sharply, largely due to companies rushing to ship goods before new U.S. tariffs took effect, the report highlights.
Exports outside the euro area grew by 4.9% in the first quarter, driven mainly by pharmaceutical products, especially from Ireland. Switzerland served as a key route, as did Germany, France and Italy.
The Wall Street Journal report emphasized Ireland’s pivotal role in transatlantic trade. Its appeal lies in a combination of skilled labor, familiarity with U.S. regulatory frameworks and favorable tax conditions. These factors have made it a hub for pharmaceutical manufacturing by U.S. firms, contributing heavily to the eurozone’s trade surplus.
While some last-minute exporting may continue, future export growth could slow due to rising tariffs, economic uncertainty, and the stronger euro.
On the import side, the stronger euro and shifts in trade caused by U.S.-China tensions are expected to lower prices.
Notably, over half of the modest 1.3% rise in imports was due to increased purchases from China.
The Wall Street Journal report noted that while such a move would shrink the eurozone economy, the central bank said the impact on jobs and income would likely be limited. These operations tend to be capital-intensive, generating high profits but relatively few jobs, and most profits flow back to the U.S.
Citing the ECB, the Wall Street Journal noted that in the long term, the eurozone could face reduced productivity if it loses the positive spillovers — such as technological and managerial know-how — that come from hosting foreign operations.
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