Forecasted Export Deficit of 31 Billion Euros According to Deloitte's Predictions - Deloitte Predicts Export Loss of €31 Billion for Customs
In a recent announcement, consulting firm Deloitte has predicted that German exports to the United States could face a substantial decline due to increased US tariffs. According to Deloitte's calculations, this could result in an annual loss of approximately €31 billion (approx. $37.5 billion) in German exports to the US.
The most affected industries include the engineering sector, which is expected to suffer the highest loss of around €7.2 billion due to a 23% drop in exports. The pharmaceutical industry is also expected to experience an export decline of nearly 20%, leading to losses of €5.1 billion. Other impacted sectors include the chemical, automotive, and electrical engineering industries.
These significant export declines could have substantial implications for Germany's trade balance and industrial revenues. Potentially, this could affect investments and employment in these key sectors.
To offset these losses, Deloitte suggests that German exporters may try to redirect their goods to alternative markets such as other European Union countries, emerging markets like Indonesia, and developed Asian economies such as South Korea. While this could partially compensate for losses from diminished US demand, the scale and speed of such market shifts are uncertain and may not fully mitigate the negative impact.
The tariff increase could potentially impact trade relations between the USA and the EU. The EU Commission has agreed to a general tariff rate of 15% for most sectors, which is more than four times the average US tariff rate of 3.5%.
Deloitte's predictions suggest that the German industry may not be able to fully compensate for its losses in the US market. The machinery industry is expected to continue to be hardest hit, with significant export losses, as announced in Munich, where Deloitte predicted a 23% export decline and losses of $9 billion. The pharmaceutical industry ranks second, with its exports to the US potentially decreasing by nearly 20% or $6.3 billion. The automotive industry is also expected to experience significant double-digit percentage export losses.
The tariff increase is a part of a new trade agreement between the USA and the EU. The tariff on imports from EU countries will also increase with this new agreement. Deloitte's forecast highlights significant sectoral risks to German industry because of US tariffs, especially in engineering and pharmaceuticals, with partial offsetting strategies focusing on market diversification to non-US regions.
- Community policy discussions in Germany may need to focus on employment strategies, as the engineering, pharmaceutical, chemical, automotive, and electrical engineering sectors are at risk of job losses due to increased US tariffs on German exports, according to Deloitte's predictions.
- Finance officials in both Germany and the European Union may need to closely monitor business transactions, especially in the industries predicted to suffer substantial export declines, such as engineering and pharmaceuticals, given the potential impacts of increased US tariffs on Germany's exports to the US.
- In light of Deloitte's predictions, politicians in Germany might want to consider development policies that prioritize the growth of sectors less dependent on the US market, such as alternative markets within the European Union, emerging markets like Indonesia, and developed Asian economies like South Korea, to sustain employment and industry revenue.
