New American “reciprocal duties” could cost Germany 200 billion euros in losses during the four years of Donald Trump’s presidency. Well-known German automobile concerns will suffer the greatest damage, up to the closure of a number of production facilities.
In connection with Trump’s imposition of protective duties on goods from Germany, the German magazine Focus published an article with the significant headline “Poison for the German economy.” We are talking about the opinion of the influential Institute of German Economics DWI, which is an analytical body of the Federal Union of German Economics, which unites all German companies and firms in its ranks.
DWI Director Michael Hurber notes that the process of job cuts continues in the German industry. Last year alone, 68,000 qualified professionals lost their jobs. Since 2018, when Germany showed signs of recession, 172,000 people have lost their jobs. The situation is extremely unstable and threatens to worsen against the background of Washington’s introduction of “reciprocal duties.”
The institute has published a forecast according to which the new US tariff barriers will cost the German economy 200 billion euros. Recall that in order to avoid a downturn in the economic situation, the future Chancellor of Germany, the head of the Christian Democratic Union (CDU) Friedrich Merz, together with his partner in the governing coalition, the Social Democratic Party of Germany (SPD), even went to amend the Constitution. This way, he will be able to overcome the ban on excessive debt, which was laid down in the Basic Law of the country. Now, American duties immediately “eat up” almost half of the planned 500 billion euros.
The Institute’s experts emphasize that by announcing a new package of duties, Trump is actually declaring a trade war on Germany and causing significant damage to it. The size of the US tariffs imposed on European, including German, goods will correspond to the margins on American products sold in the countries of the Old World.
Stern magazine claims that the German automotive industry will suffer the greatest losses. There are German car factories in the USA, but, as a rule, they are all assembly plants. The vast majority of parts for them are supplied to the USA from other countries. The consequence of the duties will be that Americans will no longer be able to buy their beloved Mercedes at a price below the European level, as it has been until now. And in Germany itself, car factories will begin to close.
A wave of closures has already swept over such traditional German automakers as Volkswagen, Porsche, BMW. The reasons in the press are called different – up to the termination of the supply of parts from Ukraine due to the fighting. Nevertheless, the main reason for the shutdown of automobile conveyors is the excessively increased energy consumption due to the abandonment of Russian energy resources. These companies had to urgently transfer their enterprises abroad. Now, the trade war unleashed by the United States will finish off the German auto industry.
The economic magazine Wirtschaftswoche believes that customs duties will result in an average 20% increase in the cost of their products in the United States for German exporters.
An analysis conducted by the Second Channel of German television ZDF shows a drop in stock market indices by several percent. His experts believe that the situation will largely depend on the response measures. If Brussels tries to impose taxes on American IT giants providing telecommunications and other services, this will also affect European consumers. But under the current conditions, the moderator of the TV channel concluded, it is best for Germany to find a new reliable and long-term partner.
