Donald Trump's duties may be a coffin nail of the modern global commercial system. Germany, a country with a immense surplus, is an economy particularly dependent on free trade. 20% import duties in the US will hit them hard. The situation is unenviable.
This is where the EU's "peace whistle" comes from. Commission president Ursula von der Leyen announced on Monday: "We proposed zero duties on industrial goods‘. She added: "Europe is always ready for a good deal". This would be an agreement for Europe — We import much little industrial products from the US than we export there. Shortly thereafter, it became clear that Trump would not accept the agreement, as reported by “Frankfurter Allgemeine Zeitung”.
Competition from Beijing and problem consecutive from Moscow
Another reason for German troubles is the emancipation of China. They encourage their manufacture to be self-sufficient. "Made in China 2025" is the name of this plan, which was adopted by the Chinese State Council in 2015.
The goal is simple: to become global marketplace leader in different sectors. 10 years later, it became clear that China no longer needs Germany. Now just... produce their own cars and machines. So the plan to redirect German exports from the US to China will not work.
It is besides crucial that since the Russian invasion of Ukraine to Germany, inexpensive gas has stopped flowing from Russia. It hurt the chemical industry., and in peculiar the full basic materials industry. Electricity is costly and bureaucracy is simply a burden. Result: According to a survey by the Federation of German Industry, 1 5th of German added value in manufacture was under pressure.
It's time for reform. “Now or never”
— For the moment, Germany is facing a crisis, says The Pioneer Jens Suedekum, a renowned economist. He believes that in consequence to Trump’s action it is right to “Response to unjustified duties with its own duties and further remedies, specified as the digital tax’.
However, the EU is now presenting an industrial offer for a free trade area. This, according to Suedekum, could besides have affirmative effects:
There are besides affirmative phenomena: China buys little American gas and directs it to Germany. Prices are decreasing due to the deflationary trend of the countries subject to duties. Consumers can be satisfied and more Chinese goods will be sent to Germany. It besides lowers prices. Yet the direct consequence of Trump's tariff shock is now "second Chinese shock". German business is now facing expanding competition.
“A European consequence to geo-economic change is needed. It must instrengthen the interior marketplace and include strategical industrial and innovation policies “Machnig, erstwhile Deputy Minister and Vice-President of the SPD economical Forum, tells us.
Conclusion: Germany has been under more economical force than always before. Coalition must yet start economical reforms. Now or never.
