Consumers in the eurozone have altered their consumption habits in anticipation of U.S. tariffs, moving away from American products and reducing discretionary spending, a study published by the European Central Bank (ECB) on Monday found.
Eurozone consumers, sitting on ample savings built up in the years since the pandemic, have been cautious in making purchases all year as uncertainty over tariffs kept key parts of the bloc's economy in limbo.
"In response to tariff-related concerns, consumers are altering their spending habits in notable ways," the ECB said in an Economic Bulletin article.
The ECB found that around 26% of its survey respondents reported switching away from U.S. products. Around 16% indicated they have reduced their overall spending.
"High-income households are more likely to switch away from U.S. goods, while lower-income households are more inclined to cut back their overall spending," the ECB said, adding that financial literacy also impacted these decisions.
Nearly all of the spending cuts impacted discretionary items while spending on necessities remained largely unaffected, the ECB added.
The ECB added that some consumers have also adjusted their inflation expectations upward, including for the longer term, suggesting that the perceived impact of tariffs on inflation may not be entirely transitory.
In addition, the bank said most eurozone workers would not be willing to accept a pay cut to retain remote working opportunities, confounding other studies which concluded that workers would forgo bigger chunks of their income.
The portion of Europeans working at least sometimes from home has doubled to 22% since 2019, even as firms are still debating and tweaking remote working policies.
"The average pay cut that employees would accept to work two or three days per week from home is 2.6%," the ECB said. "This is significantly lower than other estimates in the empirical literature."
The ECB, which surveys ordinary consumers regularly, found that around 70% of employees would not be willing to accept any pay cut to work from home, 13% would accept a pay cut of between 1% and 5%, and 8% would accept a reduction of between 6% and 10%.
Its survey found that employees who work from home more frequently tend to be willing to accept a higher pay cut to preserve their current arrangement.
But even then, people who work fully remotely are only willing to accept a pay cut of 4.6%, the bank said.
