Global Impact of Trump's Tariffs: Examination of Germany's Perspective and Global Implications
U.S. Unveils Unprecedented Tariff Package: Impact on World Economy, Germany, and Consumers
WASHINGTON - After weeks of threats, U.S. President Donald Trump has unveiled a complex and far-reaching tariff plan that could reshape global trade. The proposal, which includes a potential ten percent tariff on all imports from all countries, as well as targeted measures against countries perceived to have a significant trade deficit with the U.S., has sparked concern among businesses and economists worldwide.
With effect from Saturday, the U.S. will impose a ten percent tariff on all imports. In addition, the U.S. government has announced a mechanism that could lead to higher tariffs for many countries. This will be implemented from April 9. Countries deemed as the "worst offenders" in terms of trade deficit with the U.S. will be subject to this mechanism.
The Americans have termed these tariffs as 'reciprocal,' reflecting the principle of reciprocity. Many countries have been accused of making it difficult to import U.S. products, a practice that the U.S. can no longer tolerate. The U.S. government takes into account not only tariffs but also trade barriers such as subsidies, strict import regulations, theft of intellectual property, and currency manipulation in its calculations. These barriers, according to the U.S., are "far worse" than actual tariffs.
The U.S. has calculated a percentage for each country to reflect both tariffs and other trade barriers. The corresponding tariffs on imports from these countries are derived from this, which is roughly half as high as the value determined by the U.S. and difficult to verify. Trump has explained the reason for setting lower tariffs as, "We are good people."
Consequences for Germany and the EU
For the EU, this means that exports from its member countries to the U.S. will be subject to a 20 percent tariff from next week. Germany, as the third-largest economy in the world, is not listed separately in Trump's tariff list but falls under the regulations for the EU. Carsten Brzeski, chief economist of the Bank ING, has commented, "Europe's worst economic nightmare has just come true."
Trump criticizes the EU not only for higher tariffs but also for the value-added tax levied in Europe as a significant trade barrier for U.S. products. However, the validity of this argument is questionable, as the value-added tax is also due for products from the EU.
Current Tariff Barriers
The EU states that it is difficult to determine an absolute value due to technical reasons, as an average can be calculated in very different ways. "However, if one takes the actual goods trade between the EU and the U.S. as a basis, the average tariff rate in practice is about one percent on both sides," emphasizes the EU Commission.
Experts view the tariff differences with the EU as rather small in most areas. The major exception is the agricultural sector, where EU tariffs are sometimes significantly higher than in the U.S. - especially on dairy products, meat, sugar, and poultry.
Impact on the German Economy
As an export nation, Germany is particularly affected by Trump's tariff offensive. The U.S. is Germany's most important trading partner, accountable for around €253 billion in traded goods in 2024. German companies supplied goods worth around €161 billion to the U.S., approximately ten percent of all exports.
The Ifo Institute expects "initially a permanent decline in GDP of 0.3 percent" for the German economy, with some key industries like Pharma, Auto, and Machinery being more affected. Commerzbank chief economist Jörg Krämer estimates that the high U.S. tariffs will reduce German GDP by a total of half a percent over two years, with the economy stagnating in 2025. DIW President Fritsch, however, believes that Trump's global tariff package could push Germany back into recession by 2025.
What Happens Next?
Trump has declared a national emergency, citing economic and security risks due to trade deficits with other countries as the reason. The U.S. government has stated that other countries cannot simply announce lower tariffs on U.S. imports to achieve tariff relief from the U.S. The White House emphasizes that the tariffs will remain in effect until President Trump determines that the threat posed by the trade deficit and the underlying unfair treatment has been eliminated or substantially mitigated.
EU's Response
The EU is preparing countermeasures but remains open to dialogue. EU Commission President Ursula von der Leyen has emphasized that it's not too late for negotiations and has called on the U.S. side to engage in talks. The goal should be to reduce trade barriers, not increase them.
In addition to tariff reductions on goods like U.S. cars, new agreements are also an option. According to the EU Commission's assessment, the EU and Trump could strike a new deal to boost American exports of liquefied natural gas (LNG). It would also be possible to increase imports of military technology and agricultural products from the U.S.
The standoff between the U.S. and the EU continues, with both sides engaging in a tense trade spat while negotiations continue. It remains to be seen how the situation unfolds in the coming months.
- The complex tariff plan unveiled by the U.S. President has sparked concerns among businesses, economists, and policymakers, not just in the domestic industry, finance, and general news spheres, but also internationally, particularly within the EU and politics.
- The tariff proposals have significant implications for the business sector, especially for countries with large trade deficits, such as Germany within the EU, which faces a potential 20% tariff on exports to the U.S. These tariffs, according to some economists, could lead to a decline in the German economy's GDP, stagnation in 2025, and even push Germany back into recession by 2025.
- Despite the tense trade spat, the EU, through its Commission President, has kept the door open for dialogue and negotiations aimed at reducing trade barriers and boosting trade between the EU and the U.S., particularly in sectors like liquefied natural gas, military technology, and agricultural products.
