Dax Still in Tariff Chaos: Reporting Season Highlights Fragile Resilience

The DAX’s recent surge has masked a deeper truth: Germany’s export-driven economy is navigating a minefield of tariff disputes, supply chain disruptions, and geopolitical uncertainty. As Q1 2025 earnings reports pour in, the divide between corporate resilience and systemic fragility grows starker. For investors, the path forward hinges on distinguishing between companies thriving in this chaos—and those trapped by it.
SAP’s Triumph—and Warning—Set the Tone
SAP’s Q1 results were a masterclass in navigating turbulent waters. Revenue rose 12% to €9.013 billion, with operating profit soaring 60% to €1.8 billion. The software giant’s aggressive push into cloud computing—now accounting for 63% of revenue—has insulated it from tariff headwinds. Yet CFO Dominik Asam’s cautionary note loomed large: “U.S.-China trade tensions remain a wildcard for global supply chains.”
SAP’s stock surged 10.62% on its results, its best day in five years, as investors cheered its cost-cutting plans—up to 10,000 job cuts—to defend margins.
But the company’s success underscores a broader challenge. SAP’s cloud targets for 2025—€21.6–21.9 billion—rely on stable global demand, which remains hostage to unresolved tariff wars.
The Divergence Deepens: Tech Rises, Manufacturing Stumbles
While SAP and peers like Infineon (+3.56%) and Brenntag (+4%) thrived, traditional exporters faced a bleak reality. Delivery Hero’s pivot from Thailand to broader Southeast Asia highlighted the need for geographic flexibility, while sectors like energy (E.ON down 2.8%, RWE -1%) and defense (Rheinmetall -2.6%) grappled with sector-specific pressures.
The April 2025 HCOB Flash Germany Composite PMI fell to 49.7—the first contraction in four months—revealing a private sector in retreat.
This divergence reflects a two-track economy: tech firms insulated by high-margin software and services vs. manufacturers exposed to tariff-driven cost spikes and supply chain bottlenecks.
Tariffs as a Sword of Damocles
The U.S.-China tariff standoff remains the key wildcard. While China rolled back restrictions on semiconductors and pharmaceuticals, U.S. tariffs on Chinese goods average 145%, with no clear path to resolution. President Trump’s oscillating rhetoric—acknowledging tariff harms while denying active talks—adds to the fog.
For DAX constituents like BMW (+2.5%), which sources 40% of its parts from China, clarity is critical. Gentex Corporation’s cautionary tale—halting Chinese mirror production and slashing its 2025 outlook due to tariffs—provides a blueprint for what could unfold in Germany’s auto and parts sectors.
Navigating the Crossroads: Investors’ Playbook
Analysts urge a “disciplined bifurcation” strategy:
- Favor Tech Titans: SAP, Infineon, and others with cloud-driven revenue streams and cost-cutting discipline. SAP’s 14–15% cloud growth target is a beacon in turbulent seas.
- Avoid Tariff Crosshairs: Steer clear of sectors like auto parts and traditional manufacturing, where margins are razor-thin and supply chains brittle.
- Monitor Macro Triggers: The next 90 days will test whether the ECB’s rate cut to 2.25% or U.S.-China talks stabilize demand.
The DAX’s 2.85% April rally to 21,883.91 outpaced the STOXX 600’s 1.2% gain, but this outperformance is fragile.
Conclusion: Resilience Requires Agility—and Clarity
The DAX’s trajectory in 2025 hinges on two variables: corporate agility and tariff resolution. SAP’s results show what’s possible when companies pivot decisively—whether through cloud dominance or cost cuts. Yet without a truce in the U.S.-China trade war, even the strongest firms face headwinds.
The data is clear: sectors with high-margin, non-tariff-sensitive revenue (tech, pharma) are outperforming, while manufacturing and energy lag. The April PMI contraction to 49.7 underscores the private sector’s vulnerability. Investors ignoring this divide risk being blindsided by the next tariff shock—or rewarded by its resolution.
For now, the DAX’s tech-led rally is a lifeline—but its sustainability depends on whether global trade barriers retreat or rise. The next 90 days will decide which path the index takes.

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