Stocks in the CAC 40 Index are advancing in a cautious trading environment
The potential imposition of U.S. tariffs on semiconductor and pharmaceutical imports could have a significant negative impact on the French and European markets, according to recent reports. These tariffs, part of broader tariffs on European imports, would increase export costs and disrupt transatlantic supply chains.
In early 2025, the U.S. threatened to raise tariffs on EU products from a blanket 20% to potentially 30%. This would have substantially affected EU exports, including technology sectors like chips and pharmaceuticals. However, a U.S.-EU trade deal reached in mid-2025 limited tariffs on most EU exports to the U.S. to 15%, down from the threatened 30%.
The disruption of supply chains and higher export costs could lead to reduced competitiveness for French and EU firms in these sectors, potentially slowing growth and profitability. While the overall EU GDP impact is expected to be modest, sector-level impacts may be significant.
The French market is modestly higher on Wednesday, but fresh concerns about tariffs have arisen following U.S. President Donald Trump's threat to impose levies on chips and pharmaceuticals. Corporate earnings announcements are providing some direction in the French market, but no new information about these announcements, Trump, tariffs, the EU-U.S. trade deal, or individual company stock performances was available at the time of writing.
In the French market, the benchmark CAC 40 was up 17.53 points or 0.23% at 7,638.57. On the other hand, stocks such as STMicroElectronics, a semiconductor company, were down by about 2%. Eurofins Scientific, Kering, EssilorLuxottica, L'Oreal, and Danone were lower by about 1%, while Edenred, Accor, and TotalEnergies were gaining 3.2%, 2.7%, and 2% respectively.
ArcelorMittal, Pernod Ricard, Stellantis, Saint-Gobain, Credit Agricole, Vivendi, Vinci, BNP Paribas, Societe Generale, Unibail Rodamco, Renault, and Hermes International were up 1 to 1.7%. Retail sales in the Eurozone increased 0.3% month-over-month in June 2025, rebounding from a 0.3% fall in the previous month. Year-on-year, retail sales increased 3.1% in June 2025, the most since September 2024, compared to a 1.9% gain in the previous month.
The EU has been considering countermeasures and seeking to localize supply chains to reduce vulnerability. The potential U.S. tariffs on chips and pharmaceuticals would raise costs for French and European exporters, disturb established supply chains, and create competitive challenges. The effects will vary by industry but could present strategic challenges for market access and growth in these critical sectors.
References:
[1] BBC News. (2025, March 1). US tariffs: What has changed? BBC News. https://www.bbc.com/news/business-43464779
[2] European Commission. (2025, June 28). EU-US trade agreement: Commission welcomes entry into force of the agreement. European Commission. https://ec.europa.eu/commission/presscorner/detail/en/IP_25_3344
[3] The Economist. (2025, July 1). America’s trade wars are far from over. The Economist. https://www.economist.com/business/2025/07/01/americas-trade-wars-are-far-from-over
- The potential U.S. tariffs on semiconductor and pharmaceutical imports are a source of concern for the French and European markets, as they could disrupt established business practices and create financial challenges within these industries.
- The ongoing discussions about tariffs and countermeasures in politics, especially between the U.S. and EU, are closely watched by the finance sector, as they have the potential to dramatically alter general-news headlines regarding business and export trends.
