“Would target EU”
The German economy is trembling about a possible Trump comeback
December 28, 2023, 7:03 p.m
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The USA is by far the largest buyer of German goods. That could change if former US President Trump returns to the White House after the election next year. Representatives from various sectors are calling on the federal government to take precautions in this eventuality.
There is growing concern in the German economy that Donald Trump will be re-elected as US President next year. “A second Trump term would be bad news,” said the President of the Federation of German Industries (BDI), Siegfried Russwurm. “A president who denies climate change and questions support for Ukraine would not only pose major problems for Europe.”
It is far too early to speculate on the outcome of the election. But German industry should still prepare for possible scenarios. Polls give Trump a good chance of beating his successor and incumbent Joe Biden in the election in autumn 2024. If the Republican actually wins, Foreign Trade President Dirk Jandura sees “difficult times” ahead for Germany and Europe in trade policy. “Trump would most likely continue his ‘America First policy’ from his first term in office,” said the President of the Federal Association of Wholesale, Foreign Trade and Services (BGA). “As a result, he would again target the EU as the supposed biggest adversary after China.
There is also a fear that the USA could then withdraw further from international bodies. In a worst-case scenario, the United States could withdraw from the World Trade Organization (WTO), heralding the end of global rules-based trade. “I hope things turn out differently,” said Jandura.
“Diversifying risks is always a good way2
The USA is by far the largest buyer of goods “Made in Germany”: from January to October 2023, German products worth 132 billion euros went to the USA, two percent more than a year earlier. Against this background, BDI President Russwurm described recent proposals from the Trump camp as “worrying”. “The idea of a 10 percent tariff on all US imports would trigger a cascade of negative effects,” he warned. There would be immediate countermeasures from trading partners, which would set in motion a spiral of protectionist measures that would also significantly increase prices for US consumers and fuel inflation in the US.
The family business owners and the German Chamber of Commerce and Industry (DIHK) are therefore calling for trade agreements to be pushed forward now. “Diversifying risks is always a good way to deal with identifiable risks,” said the president of the family business, Marie-Christine Ostermann. Both the incumbent government and its predecessor did not do enough to promote a successful trade policy with corresponding agreements in the EU. A clever trade policy brings immense growth impetus through mutual recognition of standards and the reduction of bureaucracy and tariffs. “The EU and USA should quickly agree on a raw materials agreement,” said DIHK President Peter Adrian. This could reduce discrimination against European companies in the Inflation Reduction Act (IRA) support programs in the USA and prevent a reintroduction of reciprocal steel tariffs.
At the same time, the European Union should work hard to improve the competitiveness of its own internal market and promote the diversification of supply chains. To achieve this, trade agreements such as those with the South American Mercosur states as well as Indonesia and India are needed quickly “in order to reduce trade barriers there and secure trade and investments,” said Adrian.
Biden partially maintains protectionism
Trump’s first term in office was marked by great uncertainty for companies on both sides of the Atlantic: with tariffs on steel and aluminum and long-held threats to impose tariffs on car imports – which, however, were not implemented. “Even if Joe Biden were to have a second term in office, not all of the problems that are currently burdening transatlantic economic relations would disappear,” said BDI President Russwurm. Many measures from the Trump era were continued under the current US President or were only defused with interim solutions but not finally resolved.
“An active trade policy, which also includes classic market access for all companies, has not yet been Biden’s priority,” said the BDI President. “It is questionable whether this would change in a second term.” The federal government did not want to specifically address the question of the extent to which it is preparing for a possible Trump comeback. “I just don’t want to speculate about that,” said government spokesman Wolfgang Büchner about a possible victory for the Republican, who is ahead of the Democrat Biden in some polls. “And as you know, the Chancellor is not too impressed by polls,” added Büchner.