U.S. President Donald Trump on Tuesday launched a tariff war with U.S. ’'s three largest trading partners; Canada and Mexico’ya ’ imposed customs duties, and China’e doubled the import tax already imposed %He went up to 20’.
On Thursday, Mexico withdrew and postponed tariffs on some imports from ’ and Canada, but stressed that it would impose additional tariffs in early April.
The prospect of an international trade war triggered by Trump’'s tariffs comes at a bad time for the German economy, which is shrinking for the second time in a row in 2024’.
Once an economic powerhouse, ’ is projected to be the bloc's weakest performing country by 2025.
But experts suggest that the impact of the tariff war between China, Mexico and Canada will have a limited impact on Germany, at least for now, as well as affecting German manufacturers and suppliers in these three countries.
Julian Hinz, Professor of International Economics at the University of Bielefeld and Chair of the Trade Policy Research Group at the Kiel Institute for World Economics, euronews’e said: “In the medium term at least, some trade divergence can be expected in the sense that products designed to go to ABD’ye, for example China’e, now reach European markets.”
But instead of the US, China, Mexico and Canada, Europe can also import a little more than ’. Hinz says “Effects blur the overall picture a bit.
German car companies, including Audi, produce cars in ’, Mexico. According to the German Automobile Association (VDA), German automakers produced 716,000 cars in the country, mainly in the US market.
If Trump’'s tariffs mean German cars made in the Mexican ’ can't be sold as easily, or are now much more expensive in the US ’, this could have a bigger impact on “, Hinz says.
On Thursday, Trump granted a one-month tax exemption to automakers in Mexico and Canada, following talks with industry leaders.
But by the end of the month, German economist Thomas Hutzschenreuter says tariffs, followed by reduced demand for German cars from the Mexican ’, will affect the German, European and Mexican workforce.
Hutzschenreuter Euronews’e “Unemployment rates will be affected” said.
Tariffs of the European Union
Experts warn that the picture will change dramatically if Trump’ decides to impose tariffs on the European Union ’; He threatened to do so in late February.
Hutzschenreuter, “This means that individual companies will have to diversify their sales around the world. In other words, they will have to prioritize the U.S. market and give more priority to other markets. This is currently being discussed at most German companies, ” said.
“The problem, however, is that you can't react quickly when applying tariffs. The reaction takes more time. So you'll be impressed in the short term.”
According to figures from the German Trade and Investment (GTAI) office, one of the sectors particularly exposed is the fact that in 2023, Germany exceeded ’'s total exports. %It is the automotive industry of the country that makes up the 17’sini.
Germany’'s automotive industry entered crisis mode last year when once-strong automakers like Volkswagen closed their factories and laid off thousands of people.
VDA president Hildegard Müller said in February that Trump's European Union %He commented that the threat of 25 customs duties was a “provocation”.
Müller, “Tariffs are the wrong negotiation tool, ” said. “The risk of a global trade conflict that will negatively affect the world economy is high.”
According to simulations by the Kiel Institute for World Economics’, increased tariffs will lead to economic losses and inflation in both AB’ and ABD’.
In ’, Germany, this will affect the automotive and mechanical engineering industries; Kiel Institute of Total Production for Automobiles %It shows that it will decrease to 4’e.
Hinz, “This is a huge figure for an industry that is already in a difficult situation, ” says.
One thing that should be emphasized for Hinz, Germany and the EU as a whole is that although the U.S. is an important trading partner, exports He said that ’ had to go there.
Even in the worst-case scenario of dramatic tariffs imposed by “, most of the imports from AB’ remain in AB’, and many other trading partners will continue to operate as before, with trade operating perfectly under WTO rules and free trade agreements.
Hinz, “, this is where the U.S. hurts itself the most, ending up as ”.
