Customs Agreement Discourages German Industries
German companies are expressing concerns about the new EU-US trade deal, which imposes a 15% tariff on most EU exports to the US, including cars. This tariff, although lower than the initially threatened 25-30%, is seen as a costly compromise that will raise costs and prices, potentially leading to loss of growth, jobs, and prosperity in Germany.
The German Federation of Industries (BDI) has called the deal an "inadequate compromise" that sends a disastrous signal for industry, warning about the pain to supply chains and market access. Helena Melnikov from the German Chamber of Industry and Commerce described the deal as having a price that German and European economies have to bear. Wolfgang Niedermark emphasized the "immense negative impact" on Germany's export economy, especially given Germany’s reliance on car exports to the US.
In response to the trade deal, German companies are expected to adjust their global market strategies to mitigate the tariff impact. This includes reconfiguring supply chains to reduce reliance on US exports or to find tariff-advantaged production locations, diversifying export markets beyond the US to countries with lower or no tariffs, and increasing focus on non-tariff affected business sectors such as services. Companies are also adjusting pricing strategies to absorb or pass on higher costs due to tariffs, though this risks competitiveness loss.
While the deal reduces policy uncertainty and the risk of an all-out tariff war, which European industry welcomes, overall, the German economy sees it as a painful compromise that forces adaptation and could hinder growth and jobs linked to exports to the US. DIHK CEO Helena Melnikov stated that instead of relief, many German companies are reporting additional concerns. Federal Chancellor Friedrich Merz of the CDU has already expressed fears of "significant damage" to the German economy due to the trade deal. The agreement's certainty is problematic, as nothing is guaranteed.
Asian-Pacific region and other European countries outside the EU are gaining importance as new markets for German companies. The European internal market is becoming more important as a "stable and predictable economic area". The deal's provisions also encourage increased EU investments in US energy and defense sectors, which some companies are considering as a strategy to get around tariffs via local production.
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- The employment policies of German companies could be affected by the new EU-US trade deal, as they may need to adjust their global market strategies, reconfigure supply chains, diversify export markets, and increase focus on non-tariff affected business sectors.
- In the aftermath of the EU-US trade deal, industries such as finance and politics are expected to play significant roles in shaping future business decisions, as German companies seek out new markets in the Asian-Pacific region and other European countries outside the EU.
- The new trade deal could potentially impact the community policy in German cities with strong car industries, as job losses and economic instability may lead to increased social and economic hardships.
