The issue of trade policy and tariffs has long been a hot topic, particularly between the United States and its trading partner Germany (see Figure 1). The US has frequently highlighted its trade deficits with countries like Germany as a justification for imposing tariffs, a stance that became again particularly pronounced under the new administration of President Donald Trump. These measures, aimed at reducing trade imbalances, sparked intense debate about the merits and consequences of protectionism versus free trade. In this context, the potential impact of US tariffs has been a recurring concern for the German economy and companies.
Figure 1: US view on Germany’s foreign trade
Given Germany’s significant trade surplus and the prevailing view that tariffs undermine overall economic welfare, the outlook suggests that the German economy and therefore German companies will face substantial challenges.
SAFE Index Findings
The SAFE Manager Sentiment Index measures the monthly optimism or pessimism expressed by executives of publicly listed companies in Germany. Developed by Alexander Hillert and his team at the Leibniz Institute for Financial Research SAFE, the Index is based on automated text analysis that evaluates positive and negative statements in financial reports and analyst conferences.
This text data was used for a deep dive analysis on the potential effects of US tariffs on publicly listed companies in Germany. The analysis of the earnings calls shows that top executives consider the US tariff policy under President Donald Trump as particularly relevant: In the past three months, tariffs were discussed in 27 calls - about a quarter of all earnings calls held by all publicly listed firms in Germany from November to January.
The analysis was based on a comprehensive review of 111 earnings call transcripts from November 2024 to January 2025. A total of 109 sentences referencing “tariff(s)” were identified, of which 71 were deemed relevant across 27 earnings calls. Each statement was manually classified into one of three categories: positive, negative, or neutral. A call was categorized as positive if it contained at least one positive statement and no negative ones. Similarly, calls were classified as negative if they contained at least one negative statement and no positive ones. All other calls were labelled as neutral or lacking a clear opinion.
German publicly listed companies well positioned
Surprisingly, the distribution of sentiment shows that, in 59% of the analyzed calls, managers expressed a positive view on tariffs, with 16 out of 27 calls falling into this category. Meanwhile, only 15% (four calls) reflect negative sentiment, and in 26% (seven calls) managers voiced a neutral or no clear opinion.
A car company manager remarked: “We produce the most demanded vehicles in the United States we produce there [sic].” He concluded: “If you are a local producer with a local footprint, you are, of course, benefiting in case there's something changing on the tariff side.”
Similarly, a manager from the chemical industry shared a comparable perspective: “We will even benefit from those protectionism activities we maybe could expect from the new President because we are pretty well located in the United States of America, in other words, behind those protectionism walls.”
A similar tone emerged from health care managers. One commented: “When I look at our footprint in the US, we are a key local player.” Another added: “We are very, very well positioned because basically, we have twin factory setup, we can deliver -- we deliver from China to China, and we deliver to the US from the US and from Europe.”
A manager from the materials industry echoed this sentiment: “Even if there are high tariffs, we can go to local-for-local way. And right now we calculate the effect plus minus neutral.”
Likewise, a textile industry manager highlighted the flexibility afforded by their supply chain strategy: “That sourcing strategy gives us the utmost flexibility because we do see that the duties and the tariffs have become very volatile, not only for the U.S. but also for other markets.”
Managers from the telecommunications and energy sectors shared similar views. However, not all sentiments were wholly positive. Several executives stressed the broader implications of tariffs and their potential downsides. As one manager noted: “…if we want to grow wealth across the globe, it's important that we have free trade.” Another cautioned: “In case our customers would face tariffs they are not facing today, and that would have a major impact on their quantities, then of course, indirectly, we most likely would also feel that.”
In summary, the findings highlight the dual nature of tariffs as both a risk and an opportunity for German businesses with a global footprint, with a strong emphasis on their potential advantages. Many executives expressed optimism, attributing their positive outlook to strategies such as local-for-local production and flexible supply chains, which enable firms to adapt to volatile market conditions. This overall confidence underscores the preparedness and resilience of globally active German businesses in navigating the complexities of international trade.
The Diminishing Impact of Future Tariffs
German publicly listed companies are not the German economy, but our findings show that companies have already onshored their operations to the US to align with local market demands. As expressed by one manager: “One of our decisions [in 2017] was to say let's rebalance our portfolio or maybe even all the more also from geostrategic point of view, which means in concrete that we aim to have one-third of our revenues in the United States, one-third in Europe, and one-third in Asia. In the United States, we have already delivered on this goal and target”.
The tariffs introduced during the first Trump administration appear to have triggered a significant strategic shift among publicly listed companies, driving them to increase their investments in the US. This move was largely a response to the changing trade landscape and aimed at mitigating the risks and costs associated with international tariffs. However, looking ahead, the effectiveness of future tariffs in influencing corporate strategies may be considerably reduced. Many companies have already established or expanded their US operations, meaning that the groundwork for localized production and supply chain adjustments has largely been laid, leaving less room for further strategic realignment in response to new tariffs.
Alexander Hillert is Co-Director of the SAFE Department “Financial Intermediation” and Professor for Finance and Data Science.
Jonas Schlegel is Financial Economist at the SAFE Policy Center.
Blog entries represent the authors’ personal opinion and do not necessarily reflect the views of the Leibniz Institute for Financial Research SAFE or its staff.
