German foreign trade faces an uncertain outlook, according to BGA reports
The coronavirus pandemic, Brexit, and the US elections have cast a shadow of uncertainty over the future of German foreign trade. These factors have introduced significant structural changes and uncertainties that could impact trade flows, logistics, trade policies, and geopolitical dynamics.
- The Pandemic's Impact: The pandemic has exposed vulnerabilities in global logistics, leading to disrupted supply chains, increased shipping costs, extended transit times, and labor shortages in warehousing and customs procedures. This has posed challenges for Germany in maintaining efficient trade flows and increased costs for exporters (source [3]). Additionally, the pandemic has slowed global economic activity, affecting demand for German exports, while altering energy import patterns and dependencies (source [2]).
- Brexit's Effect: Although the direct impact of Brexit on German trade is not yet fully clear, the complexity of trade relationships between Germany and the UK has increased due to customs checks, regulatory divergence, and added administrative burdens that increase costs and uncertainties. This heightened risk environment is a concern for German exporters (source [1]).
- US Elections and Trade Policy: The outcome of the US elections will have an impact on foreign trade, with the Bundesbank predicting that increased US tariffs and trade policy uncertainty following the elections could have a growth-dampening effect on the German economy and its foreign trade (source [1]). Retaliatory tariffs by the EU, including Germany, could further complicate trade flows.
Overall, these factors have resulted in a forecast of stagnating growth in German foreign trade for 2025, with potential counterbalance from German fiscal policy beginning in 2026 (increased government spending on defense and infrastructure). However, trade disputes, geopolitical tensions, and policy uncertainties remain significant risk factors for the future of German foreign trade (source [1]).
Energy import dependencies, notably on Russia, also pose risks to Germany’s supply security and costs, which are critical for its export-driven economy (source [2]).
In summary, the future of German foreign trade is shaped by pandemic-induced logistical challenges, Brexit-related trade frictions with the UK, and the US trade policy environment influenced by elections, all combining to create a complex risk landscape with moderated growth prospects ahead. The BGA President, Börner, believes that whoever wins the election, transatlantic relations may become more civilized, but will not return to their old paths (source [4]).
As the coronavirus pandemic continues to cause infection numbers to rise worldwide, there is a risk that it could further negatively impact the recovery of foreign trade by the end of the year (source [5]). The BGA has expressed caution about the future of interstate trade in Germany in light of these challenges.
- Finance Implications: The US elections could have financial repercussions for Germany, as an increase in tariffs and trade policy uncertainty following the elections might negatively affect the German economy and its foreign trade, potentially requiring fiscal intervention to mitigate the downturn (source [1]).
- Political ramifications: With the pandemic showing no signs of abating, political leaders worldwide struggle to find solutions to support the economy while tackling the ongoing crisis. This justifies the growing interest among politicians in domestic support measures and infrastructure support, which could influence the direction of economic policy in the near future (source [5]).
