Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
European companies are sounding the alarm over the strong euro, as the single currency’s surge against the dollar this year opens up a new threat to exporters already contending with US President Donald Trump’s tariffs.
German software group SAP, carmaker Porsche, brewer Heineken and French industrial giant Schneider Electric are among the companies to warn investors of a potential hit after the euro climbed more than 9 per cent to a three-year high.
The euro’s rally, which puts it on track for its best year against the dollar since 2017, undermines the competitiveness of European exporters to the US, where there are already signs that consumers are reining in spending because of the uncertainty created by Trump’s trade war.
The US imposed so-called reciprocal tariffs on the EU of 20 per cent in early April but subsequently cut them to 10 per cent to allow for 90 days of talks between the two sides.
“The strong euro is exacerbating the tariff shock,” said Robin Winkler, chief economist for Germany at Deutsche Bank, adding that it was “harming [companies’] competitiveness in foreign trade”.
HSBC analysts last week slashed their forecast for profit growth this year for companies in the FTSE Europe index to 2.9 per cent, warning that the stronger euro could “significantly affect” their overseas earnings.
Although many companies use currency hedges to protect against swings in foreign-exchange rates, several have told investors that a prolonged rally in the euro would squeeze profits and revenues. The euro’s gains could weigh down demand as goods become more expensive to US buyers, or mean profits translated into home currencies are reduced.
SAP chief financial officer Dominik Asam said that each $0.01 strengthening in the euro-dollar rate would shave €30mn from its full-year revenues.
He added that while SAP had hedged a significant portion of its currency exposure this year, “2026 is more difficult because then we would suffer really from the decline in the exchange rate” once the hedges expire.
Heineken said the surge in the euro against a range of currencies, including the Mexican peso, could take €180mn off its full-year adjusted net profit.
Schneider Electric chief financial officer Hilary Maxson cautioned that the weaker dollar, alongside other currency effects, would knock annual revenues at the maker of electrical equipment by as much as €1.25bn.
Porsche had sought to minimise the effect of the stronger euro, chief financial officer Jochen Breckner told journalists, but he said the group, which counts North America as its second-largest market, would feel a “certain effect”.
Germany’s HelloFresh, a provider of meal kits, warned that it had based its outlook for the year on a euro-dollar rate of $1.04, and a rate of $1.14 would hit adjusted operating profit by €28mn.
The euro’s resurgence marks a striking reversal from the final quarter of last year, when the dollar staged a blistering rally on expectations that Trump’s economic agenda would boost US growth and hurt America’s trading partners.
Instead, indications that Trump’s aggressive trade war is having a chilling effect on the US economy have hit the dollar and left the S&P 500 lagging behind European stocks this year.
In a sign of investors’ twin concern over the euro and tariffs, shares of European exporters have underperformed the wider European market. A basket of shares, including Stellantis, SAP and Daimler Truck, has underperformed as the euro has climbed, according to Barclays.
Trevor Greetham, head of multi-asset investing at Royal London Asset Management, said a combination of the currency’s strength and Trump’s duties had prompted him to scale back exposure to European stocks.
Several major banks expect the euro to strengthen further after it touched a more than three-year high of $1.157 in April.
Athanasios Vamvakidis, Bank of America’s global head of G10 currency strategy, said the currency had also been boosted by the German government’s €1tn stimulus package.
“The market was too optimistic on the US and too pessimistic on Europe,” said Vamvakidis, who predicts the euro will hit $1.17 by the end of the year.
Additional reporting by Patricia Nilsson, Emily Herbert and Ian Johnston