America First: How Trump's tariffs threaten the German economy!

America First: How Trump's tariffs threaten the German economy!

Kiel, Deutschland - The global economy is on the abyss! Regardless of whether Joe Biden or Donald Trump takes the race, the motto remains clear: America First! The United States could further tighten its aggressive trade policy in order to protect domestic companies from foreign competition. This could have dramatic consequences for global trade, warn experts from the Kiel Institute for the World Economy (IFW). A Trump victory would isolate the United States and endanger the multilateral trade agreements of the WTO, which could significantly destabilize the global economy.

The researchers have designed alarming scenarios: Trump plans to raise tariffs between 10 and 60 percent on goods from countries without free trade agreements, with China being particularly affected. Europe, as the largest trading block in the world, would suffer massively from these tariffs. In 2023, almost 10 percent of German exports went to the United States, which underlines the importance of the US market for the German economy. A decline in world trade by 2.5 percent in the first year and in the long term by 4 percent could cost the EU by up to 21 billion euros and Germany by up to 6 billion euros.

The dark side of the tariffs

But the tariffs also have a downside: they could break the exports of the United States by 38 percent! While some sectors such as the service industry and the high-tech industry could possibly benefit, key industries such as the automotive and pharmaceutical industry are facing a dark fate. The loss of competitiveness could have catastrophic consequences for the entire economy.

The researchers also warn of the weakening of the WTO, which could continue to come under pressure through one -sided tariffs and protectionist measures. A decay of the WTO would be worse than the tariffs itself and could split the global economy into enemy blocks. The simulations show that such a decay would hit the EU by more than 0.5 percent and China by 0.7 percent. In the worst case, GDP in China could decrease by 5.7 percent and 3.3 percent in Germany! The United States would have less to win in a trade war, while the EU would lose enormously. It is due to Europe to defend the trade regulations and to prevent the fragmentation of the global economy!