Trump's Tariff Chaos: Exposure and Opportunities in EU Manufacturing Sectors

The Trump 2025 administration's aggressive tariff strategy has ignited a storm in global trade, particularly targeting the European Union's (EU) automotive and industrial sectors. With additional duties ranging from 7.5% to 30% on EU exports and phased implementation schedules, the U.S. has weaponized trade policy to pressure the bloc into revising its practices. While these tariffs threaten to erode margins for export-dependent European firms, they also create fertile ground for identifying undervalued equities in resilient companies adapting to the new reality.

Sector-Specific Risks: A Closer Look

The automotive and industrial sectors are under direct assault. The 25% Section 232 tariffs on automobiles and parts, combined with reciprocal duties based on EU Column 1 rates, have already forced major players like Volkswagen and BMW to restructure supply chains. Volkswagen's Q2 2025 operating profit dropped 29%, with tariffs costing €1.3 billion in the first half of the year. Similarly, Mercedes-Benz faces structural challenges in the U.S. van market due to its reliance on European production.

Industrial goods are equally vulnerable. The 50% tariffs on steel and aluminum imports have driven up input costs for manufacturers, squeezing margins. U.S. domestic producers like Independent Can (ICAN) have raised prices to offset these hikes, while Ford anticipates vehicle price increases of $2,000–$4,000 per unit. The ISM Manufacturing PMI hit 48.5 in May 2025, signaling a contraction that could ripple through global supply chains.

Undervalued Equities: Navigating the Turbulence

Despite the headwinds, several EU companies are trading at significant discounts to their intrinsic values, offering compelling opportunities for investors who can differentiate between short-term pain and long-term potential.

1. Amper, S.A. (BME:AMP)
2. Sector: Industrial and engineering solutions
3. Market Cap: €317.29 million
4. Discount to Fair Value: 43.2%
5. Key Metrics:
   • Earnings Forecast: 30.78% annual growth
   • Net Income (H1 2025): €3.04 million (profitable after a prior loss)

6. Analysis: Amper's pivot to profitability and robust earnings growth make it a standout. Its diversified operations in defense, energy, and telecommunications provide insulation from sector-specific shocks.

7. Nordex SE (XTRA:NDX1)

8. Sector: Onshore wind turbine manufacturing
9. Market Cap: €5.13 billion
10. Discount to Fair Value: 34.9%
11. Key Metrics:
    • Earnings Forecast: 39% annual growth
    • Net Income (H1 2025): €38.97 million
    • Projects Segment Revenue: €6.36 billion

12. Analysis: Nordex's strong order book and focus on renewable energy position it to capitalize on the global green transition. Its recent profitability and growth trajectory suggest undervaluation.

13. Rusta AB (OM:RUSTA)

14. Sector: Home and leisure retail
15. Market Cap: SEK12.12 billion
16. Discount to Fair Value: 39%
17. Key Metrics:
    • Earnings Forecast: 17.4% annual growth
    • Strategic Move: Bonded warehouse in Norrköping to cut costs by 2026
18. Analysis: Rusta's expansion into Germany and Norway, coupled with operational efficiencies, underscores its potential to outperform.

Investment Advice: Balancing Risk and Reward

For investors, the key lies in selecting companies with flexible supply chains, diversified revenue streams, and strong cash flow generation. Firms like Nordex and Amper, which are reinvesting in U.S. production and renewable energy, demonstrate agility in navigating the tariff landscape. Conversely, companies with rigid structures and high exposure to steel/aluminum—such as SPIE SA—require closer scrutiny due to their elevated debt levels.

Opportunistic sectors:
- Renewables: Nordex and BioGaia AB (OM:BIOG B) are leveraging green energy and probiotic healthcare trends.
- Industrial Efficiency: Absolent Air Care Group AB (OM:ABSO) is innovating in air filtration, a sector less sensitive to trade wars.
- Homebuilding: U.S. firms like Lennar Corp. (LEN) and Taylor Wimpey (TW) benefit from localized production and low debt.

Conclusion: A Path Forward

Trump's tariffs have created a volatile environment for EU manufacturers, but they also highlight the importance of strategic adaptation. While the immediate risks are clear—margin compression, supply chain bottlenecks, and retaliatory measures—investors who focus on companies with strong fundamentals and innovative strategies can uncover significant value. The undervalued equities identified here represent not just survival in the face of tariffs but potential for long-term growth in a restructured global economy.

In this era of trade turbulence, the mantra remains: diversify, adapt, and invest with a long-term horizon.