However, a Brief Correction is Possible
In 2025, the USD lost value against all major currencies. The euro appreciated the most, with all other major currencies rising less sharply against the USD.
The euro and its companies bore the brunt of the burden. With the impending tariff agreement with the US, European companies will face further margin issues. Ultimately, although consumers in the US pay the tariffs, importers collect them and distribute goods to American industry and sometimes to end consumers. Pressure on European producers, particularly from industry, is to be expected. This pressure will build gradually.
The Good News is That Interest Rates Won’t Be Rising Anytime Soon
If the pressure on sales prices eases, it is unlikely that inflation will rise rapidly. Outside the US, tariffs will lead to falling prices due to increased competition. This means that financing costs will not be a burden, but will instead have a beneficial effect by stimulating investment.
Investments are necessary to enable innovations that will increase productivity. This correlation is imperative if European industry is to survive.
US Tariffs Stimulate Global Competition
China, in particular, has built up significant excess capacity. Due to the high barriers to entry into the US market, these products must be sold elsewhere. This leads to fierce global competition, which can quickly become threatening.
- Companies that do not innovate sufficiently in their production processes will encounter problems.
- The same applies to companies in the financial sector that are not sufficiently innovative.
- Companies that fail to control their risks but want to remain at the mercy of change will encounter problems.
Even companies that adequately address the above points cannot be guaranteed to survive. However, I believe that taking care of these issues significantly increases the chances of survival.
I Wouldn’t Want to Be a Manager These Days
I prefer working on industry solutions because I believe my team and I can address areas that companies are not ideally positioned to tackle. While companies have complete control over production innovation, it sometimes makes sense to have things done more quickly and efficiently by external parties.
As a manager, you face considerable risk today. It is particularly challenging to spend money with the aim of defending or increasing margins when margins are under pressure. By their very nature, innovative approaches are not yet reliable enough to prove that they can increase margins.
However, if a manager fails to invest in this area, they are acting negligently. Embracing innovation sets the course for future success, including gaining market share.
The environment is complex, but not confusing. Taking action always depends on trust. However, this starts with self-confidence. While this is rarely lacking, it is more common than one might think. We focus entirely on supporting business leaders. In complete confidence.
