Analysis of the Impact of Geopolitical Tariff Threats on European Export Firms and U.S.-Listed Multinational Corporations

Based on the latest collected data and market information, I provide you with a

.

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U.S. President Donald Trump publicly stated on

that he may impose tariffs on countries that do not support the U.S. acquisition of Greenland. Trump said: “If they do not agree with our position on the Greenland issue, I may impose tariffs on these countries, because we must acquire Greenland for national security needs”[1][2]. This threat immediately triggered renewed market concerns about U.S.-EU trade relations.

According to the latest reports, Trump has threatened to impose a

on , citing their opposition to the U.S. plan to take control of Greenland[1]. The background to this policy threat is:

• European countries (especially Denmark) have clearly opposed the U.S. proposal to acquire or militarily control Greenland
• French President Emmanuel Macron announced the deployment of troops to hold joint military exercises in Greenland with NATO countries such as Denmark to show support for Greenland
• Danish Foreign Minister Lars Løkke Rasmussen called Trump’s goal “completely unacceptable”

This tariff threat may affect the following areas:

Sector	Specific Impact
Trade Agreements	Recent trade agreements reached between the U.S. and the UK, EU face uncertainty
Transatlantic Relations	NATO internal unity is tested, and geopolitical tensions intensify
Market Confidence	Investors’ concerns about trade stability lead to increased volatility

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Based on the latest market data[0], I have compiled the performance of major indices from January 5 to January 16, 2026:

Index	Close on January 5	Close on January 16	Change During Period
S&P 500 (U.S.)	6,902.04	6,940.00	+0.55%
STOXX 600 (Europe)	601.76	614.38	+2.10%
DAX Index (Germany)	24,868.69	25,297.13	+1.72%

From the short-term market reaction, European markets even outperformed U.S. stocks slightly, which may reflect the market’s lagged reaction to the tariff threat or optimistic expectations for trade negotiations. However, it should be noted that:

• The S&P 500 fell 0.30% on January 16, indicating that the market has begun to price in tariff concerns[0]
• Trading volume data shows a significant increase in European market turnover (STOXX volume rose from 194 million shares to 245 million shares)[0]
• The German DAX index saw high volatility, with a single-day price swing of 0.56%[0]

Different industries have significant differences in their sensitivity to tariff threats:

• Automotive Industry
  : Germany’s auto exports to the U.S. account for about 35% of its total exports, posing the highest risk
• Luxury Goods Industry
  : European luxury goods giants such as LVMH and Kering have a dependence on the U.S. market of about 28%
• Pharmaceutical Industry
  : German pharmaceutical giants (Bayer, Merck) have a U.S. export share of about 22%

• Technology and Software
  : Companies such as SAP derive most of their revenue from software licensing and services, with minimal direct impact from tariffs
• Food and Beverage
  : Export dependence is about 18%, mostly finished consumer goods
• Industrial Equipment
  : The supply chain is highly complex, and may face cost pass-through pressure

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German automakers (Volkswagen, BMW, Mercedes-Benz, Porsche) have a high dependence on the U.S. market. Represented by German DAX index components, German auto export firms face the following risks:

Risk Type	Specific Performance
Increased Costs	If a 10% tariff is imposed, the cost per vehicle is expected to increase by $3,000-$8,000
Pricing Pressure	Price increases may lead to lost market share, while maintaining prices will compress profit margins
Supply Chain Adjustment	Some production lines may need to be transferred from Germany to North America

According to analysis from Morningstar’s Munich Research Center, European stock markets once fell nearly 20% in April 2025 due to tariff threats, but later recovered the losses[3]. Currently, European stock markets are only trading at a 1% discount to fair value, with valuations having priced in most positive news[3].

Take

as an example[0], which is Europe’s largest software company and an important component of the German DAX index:

• Market Capitalization: $235.42 billion
• Current Share Price: $202.15
• Price-to-Earnings Ratio: 33.31x
• 12-Month Share Price Performance: -21.30%

As a software service provider, SAP delivers its products primarily through digital channels, so the direct impact of tariffs is limited. However, the company still faces indirect risks:

• European clients (especially automotive and manufacturing clients) cut IT spending due to tariff pressures
• Fluctuations in the USD/EUR exchange rate affect the conversion of euro-denominated revenue
• Overall economic uncertainty leads enterprises to postpone digital transformation projects

SAP’s share price has fallen 23.95% in the past 6 months, significantly underperforming the broader market[0], which partly reflects market concerns about Europe’s economic outlook.

European luxury goods giants (LVMH, Hermès, Kering) have significant exposure to the U.S. market:

• Revenue Structure
  : The U.S. is one of the largest overseas markets for European luxury goods, accounting for about 25-30% of the industry’s total revenue
• Consumer Base
  : U.S. high-net-worth individuals are the core customers of European luxury goods
• Exchange Rate Factor
  : The EUR/USD exchange rate fluctuates around 1.16, and a stronger euro further erodes profits[3]

If the U.S. imposes a 10% tariff on Europe, luxury goods firms may face:

1. Product price increases (may lead to loss of price-sensitive customers)
2. Absorbing tariff costs (compressing gross profit margins)
3. Increasing the proportion of local production in the U.S. (increasing capital expenditure)

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is a core heavyweight stock in the U.S. technology sector and a model of global operation[0]:

Region	Revenue Share	Amount (Q4 FY2025)
Americas	43.1%	$44.19 billion
Europe	28.0%	$28.70 billion
Greater China	14.1%	$14.49 billion
Rest of Asia Pacific	8.2%	$8.44 billion
Japan	6.5%	$6.64 billion

1. Supply Chain Risk
   : Apple’s products are mainly manufactured in China; if the EU imposes retaliatory tariffs, it may affect the cost of iPhones, Macs and other products entering the European market
2. European Revenue Risk
   : European operations account for 28% of Apple’s total revenue; if the U.S.-EU trade war escalates, European consumer purchasing power may decline
3. Exchange Rate Risk
   : A weaker euro will reduce the dollar-converted value of European revenue

• 5-day decline of 1.40%, 1-month decline of 6.00%[0]
• The market is cautious about the earnings report to be released on January 29 (expected EPS: $2.65)[0]

U.S.-listed multinational corporations face two-way risks:

• If the EU imposes retaliatory tariffs on the U.S., U.S. export firms to the EU such as Boeing, Caterpillar, and Pfizer will be affected
• Boeing’s aircraft exports to Europe may face additional tariff pressure
• Pharmaceutical companies (Johnson & Johnson, Merck) may face pricing pressure on their patented drugs in Europe

• The complexity of transatlantic supply chains means that any trade friction will increase costs
• Enterprises may be forced to restructure their supply chains, leading to increased short-term capital expenditure

The U.S. stock financial sector (JPMorgan Chase, Goldman Sachs, Morgan Stanley) also faces risks:

• Cross-border M&A activity may decrease (M&A transactions are affected by geopolitics)
• Revenue contribution from European operations will decrease
• Client risk appetite declines, putting pressure on wealth management business

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Based on current information, I have constructed three possible scenarios:

: Through diplomatic negotiations, the U.S. abandons or postpones the tariff plan

• Impact on U.S. Stocks
  : +2% to +5%
• Impact on European Stocks
  : +3% to +7%
• Key Variables
  : EU’s negotiating stance, U.S. congressional opposition

: The U.S. imposes a 5-10% tariff on some countries/products, and the EU takes limited countermeasures

• Impact on U.S. Stocks
  : -2% to -5%
• Impact on European Stocks
  : -3% to -7%
• Duration
  : 3-6 months
• Affected Sectors
  : Automotive, luxury goods, agricultural products

: Both sides impose high tariffs on each other, and trade relations remain tense

• Impact on U.S. Stocks
  : -10% to -15%
• Impact on European Stocks
  : -12% to -18%
• Duration
  : 12 months or more
• Market Impact
  : Global economic growth slows, and safe-haven assets are favored

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Industry	Recommendation	Rationale
Automotive	Underweight	High exposure, overvalued (only 1% discount to fair value)[3]
Luxury Goods	Neutral	Monitor brand pricing power; prioritize firms with high U.S. localization levels
Technology	Overweight	Software firms such as SAP have minimal direct impact from tariffs, with steady growth in cloud computing business
Pharmaceutical	Underweight	Overvalued, and faces pressure from U.S. drug pricing policies

Company Type	Recommendation	Rationale
Technology Giants	Buy on Dips	Firms such as Apple and Microsoft have ample cash reserves and the ability to cope with trade frictions
Industrial Leaders	Cautious	Boeing and Caterpillar have high exposure to Europe; need to monitor order changes
Financial Stocks	Hold	Diversified business, strong risk resistance

1. Focus on Exchange Rate Hedging
   : Fluctuations in the EUR/USD exchange rate may amplify the impact of tariffs
2. Diversify Investment Regions
   : Increase allocation to Asian markets (Japan, China) to hedge against European risks
3. Allocate to Defensive Assets
   : Utilities and essential healthcare sectors typically perform stably amid geopolitical risks
4. Monitor Earnings Guidance
   : Focus on comments from corporate management regarding the impact of trade frictions

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Investors should closely monitor the following indicators:

Indicator	Importance	Monitoring Frequency
Progress of U.S.-EU Trade Negotiations	Critical	Weekly Updates
EUR/USD Exchange Rate	High	Daily
Stoxx Europe 600 Index Trend	High	Daily
Earnings Guidance of German DAX Constituents	High	Q1 Earnings Season
U.S. CPI/PPI Data	Medium	Monthly
Federal Reserve Policy Stance	Medium	FOMC Meetings

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The impact of this geopolitical tariff threat on European export firms and U.S.-listed multinational corporations has the following characteristics:

1. Limited Short-Term Impact
   : Currently, it only remains at the threat level, and the market reaction is relatively mild (both U.S. and European stock markets have recorded positive returns over the past 10 trading days)[0]

2. Significant Industry Differentiation
   : Traditional export sectors such as automobiles and luxury goods face the highest risk exposure, while emerging sectors such as technology and software are less affected

3. Valuations Have Partially Priced in Expectations
   : The current 1% discount on European stock markets means most positive news has been priced in[3], and downside risks deserve attention

4. Room for Negotiation Remains
   : U.S. lawmakers have communicated with Denmark to “lower the temperature”[1], so a diplomatic solution is still possible

: It is recommended that investors remain prudent, appropriately reduce exposure to European export-oriented firms, and monitor negotiation progress to adjust investment strategies. For U.S.-listed multinational corporations, it is recommended to select technology leaders with high globalization levels and strong supply chain resilience as defensive allocations.

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[1] ABC News - “Trump threatens tariffs for nations that don’t support his aim to acquire Greenland” (https://abcnews.go.com/Politics/trump-threatens-tariffs-nations-support-aim-acquire-greenland/story?id=129283902)

[2] Al Jazeera - “Trump threatens tariffs over Greenland, calls it vital for security” (https://www.aljazeera.com/news/2026/1/16/trump-may-tariff-countries-that-dont-go-along-with-his-greenland-plan)

[3] Morningstar - “5 Charts Every Investor Should Watch in Europe in 2026” (https://global.morningstar.com/en-eu/markets/5-charts-every-investor-should-watch-europe-2026)

[0] Jinling AI Financial Database - Market Data and Corporate Financial Analysis