How will European consumers react to US tariffs?

30 April 2025

By Adam Baumann, Luca Caprari, Maarten Dossche, Georgi Kocharkov and Omiros Kouvavas

The newly imposed US trade tariffs on European products are causing European consumers to think twice about what’s in their shopping cart. Typically, the extent to which tariffs affect consumers depends on the price elasticity of demand for the affected products and services – meaning consumers may switch to cheaper alternatives if prices rise. However, the recent US tariffs may lead to a broader shift in preferences, causing Europeans to move away from US products and brands altogether, regardless of price changes.

This blog post uses data from the ECB’s Consumer Expectations Survey (CES) to get a better idea of how consumers might react to potential tariffs and the reasons behind their choices. In March 2025 CES participants were asked how likely they were to switch away from US products in response to potential US tariffs and a possible retaliation from the EU.^[1] Consumers were presented with three different scenarios: potential tariff increases of 5%, 10% or 20%. Respondents were also asked about their main reason for substituting or not substituting US products, with options referring to price, preference or the lack of alternatives.^[2]

Preferences are shifting away from US products

Results show that consumers are very willing to actively move away from US products and services. The median substitution score was 80 on the 0 to 100 scale, where 0 indicates no willingness to buy alternatives to US products and 100 signifies a strong willingness to do so.

Chart 1 (panel a) illustrates the median degree of substitution of US products and services by hypothetical tariff percentage and primary reason for switching. While substitution away from US products is high across all tariff scenarios, it is much higher for respondents who indicate a preference shift, rather than the price change triggered by the tariff, as the primary reason. This suggests that consumers’ reactions may not just be a temporary response to tariff increases, but instead signal a possible long-term structural shift in consumer preferences away from US products and brands.

These results differ from similar surveys conducted in the United States, where consumers reported that they would stockpile goods expected to increase in price due to potential tariffs.^[3] In the euro area, however, it seems that the mere presence of a tariff would prompt a large share of consumers to reconsider what they buy. Overall, around 44% of respondents expressed a willingness to shift their spending away from US products, irrespective of the tariff rate and primarily due to a preference to switch away (Chart 1, panel b). For this group, the median substitution score was 95 and remained almost unchanged across the randomised tariff increases of 5%, 10% and 20%.

Chart 1

Willingness to substitute and reason for substitution

a) Willingness to substitute by reason and hypothetical tariff size	b) Reason for substitution
(percentage willingness)	(percentage of respondents)

Consumers’ reactions depend on their income

Generally speaking, price elasticity tends to decrease with income. When prices rise, those with lower incomes often have to reconsider their purchasing decisions, while higher earners are less affected. However, CES data show that respondents’ willingness to substitute US products and services increases with each income quintile (Chart 2, panel a). Contrary to the usual pattern, our findings suggest that the more people earn, the more likely they are to switch. This unexpected result could be attributed to the fact that higher-income households may be more motivated by preference than by price concerns. Even though they could afford more expensive US products and services, they consciously choose alternatives.

Chart 2 (panel b) shows that the percentage share of respondents citing preference as their main reason for substitution increases with reported household income, while the influence of price decreases. Likewise, consumers who allocate a larger portion of their spending to discretionary items, such as multimedia or entertainment, have a higher substitution score than consumers who spend more on necessities like food or electricity (Chart 2, panel a). So, it’s preference that matters, not price.

Looking ahead, responses from the CES indicate that ongoing geopolitical and trade developments may lead to significant shifts in consumer spending, particularly concerning US products. Our findings indicate that, in the current context, consumers’ reactions could therefore considerably deviate from standard textbook consumption patterns in response to higher tariffs.

Chart 2

Willingness to substitute and reasons for substitution – income and consumption

a) Willingness to substitute by income quintile and discretionary consumption
(percentage willingness)
b) Reason for substitution by income quintile and discretionary consumption
(percentage of respondents)

The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.

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