Fear of US tariffs prevails in the Eurozone/ ECB Bulletin: Consumers cut spending, avoid American goods
Eurozone consumers have changed their consumption habits in anticipation of US tariffs, moving away from American products and reducing unnecessary spending, a study published by the European Central Bank showed.
Eurozone consumers, backed by the vast savings accumulated in the years since the pandemic, have been cautious about making purchases throughout the year as uncertainty over tariffs held back key parts of the bloc's economy.
"In response to concerns related to tariffs, consumers are changing their spending habits in noticeable ways," the ECB said in its Economic Bulletin.
The ECB found that about 26% of respondents reported that they had given up American products. About 16% indicated that they had reduced their overall spending.
"High-income households are more likely to move away from American goods, while low-income households are more likely to reduce their overall spending," the ECB said, adding that financial literacy also influenced these decisions.
Almost all of the spending cuts affected non-essential items, while core spending remained largely untouched, the ECB added.
According to the Frankfurt-based financial institution, some consumers have also adjusted their inflation expectations upward, including for the longer term, and suggested that the perceived impact of tariffs on inflation may not be entirely transitory.
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