Eurozone consumers happy to ditch US products if hit by tariffs: ECB study

[FRANKFURT] Eurozone consumers are happy to ditch US products if they are hit by tariffs in the course of a tit-for-tat trade war with US President Donald Trump’s administration, a European Central Bank survey showed.

The ECB’s Consumer Expectations Survey, conducted in March before Trump had even announced, and later paused his tariff blitz, unexpectedly showed a change in preference regardless of any price increase.

The 19,000 consumers were asked if they would look for alternatives to US products if an import tax of 5 per cent, 10 per cent or 20 per cent was imposed by the US and, in retaliation, by the European Union.

“Results show that consumers are very willing to actively move away from US products and services,” the ECB said in a blog post.

The median substitution score was 80 on a scale where zero indicates no willingness to buy alternatives to US products and 100 signifies a strong one.

When asked for their motivations, 43.7 per cent of respondents cited a change in preference, a bigger share than the 38.1 per cent who said this was down to prices.

Accordingly, the willingness to substitute was greater for higher-income households.

“Our findings indicate that, in the current context, consumers’ reactions could therefore considerably deviate from standard textbook consumption patterns in response to higher tariffs,” the ECB said.

Only 8.9 per cent of respondents said there was a lack of alternatives, which could prove a sore point if EU tariffs were actually imposed on products such as digital services. REUTERS