The ongoing trade war between the US and its European allies, led by Trump’s aggressive tariff policy, is sending shockwaves through Germany’s economy. As one of the countries most affected, Germany is facing significant challenges in its economic landscape.
Germany’s economy is facing significant challenges due to the ongoing trade war between the US and its European allies. The aggressive tariff policy implemented by the Trump administration has sent shockwaves through the global market, with ‘shockwaves’ being one of them, with Germany being one of the countries most affected.
Donald Trump was born on June 14, 1946, in Queens, New York.
He graduated from the University of Pennsylvania and later served as a real estate developer.
Trump entered politics in 2015, running for the Republican presidential nomination.
He won the election in 2016, becoming the 45th President of the United States.
His presidency was marked by 'controversy' and 'polarization'.
Trump served one term, from 2017 to 2021, before losing the 2020 presidential election to Joe Biden.
The concept of protectionism is not new to Germany. In the 19th century, Chancellor Otto von Bismarck introduced protective tariffs on wheat imports as part of a larger effort to shield the country’s farmers from foreign competition. While this policy had its failures, it also laid the groundwork for future trade agreements and negotiations.
The Trump administration’s list of countries targeted by steep punitive tariffs has fundamentally shaken the rules-based global trade order. Germany is among the countries that will be affected by these tariffs, which are aimed at curbing a large trade surplus with the US. ‘curbing a large trade surplus’ being one of them, China is the primary target, with the US imposing tariffs of up to 145% on all goods exported to the country.
The European Union has already threatened retaliatory tariffs against the US, but the EU’s response has been cautious due to the uncertainty surrounding Trump‘s policies. Germany’s export-oriented firms have much to lose in a global trade war, as industries such as automobiles, chemicals, machinery, and pharmaceuticals have a strong presence in the US market.
Germany is waiting for Berlin to lead the retaliation against the US tariffs. However, with a new government still being formed after snap elections in March, Germany lacks a strong voice from Europe’s biggest economy. The European Commission has agreed not to act hastily and instead pursue negotiations.
The EU’s lack of a unified response has led to concerns about the competitiveness of the German economy. Economists believe that the tariff shock will increase pressure on policymakers to defend the country’s competitiveness in an increasingly challenging global environment.
Carsten Brzeski, ING’s chief economist, believes that responding to Trump‘s policies with retaliation is not a good idea, given their erratic nature. Instead, he suggests that policymakers focus on investments, structural reforms, reducing bureaucracy, and deeper integration like a capital markets and defense union. Such reforms could achieve far more than a long list of retaliatory tariffs.
The US president’s goal of relocating German operations across the Atlantic is also unlikely to materialize in the near future, given the uncertainty surrounding Trump‘s economic policies and tariff chaos.
