Warning of Trump-Zöllen: Austria's economy in danger!

Warning of Trump-Zöllen: Austria's economy in danger!

Georg Knill, President of the Industrial Association and the head of a mechanical engineering group, commented in an interview on the worrying Situation of international trade relationships. The focus of his comments is the punitive tariffs threatened by the United States under President Trump, which could be up to 50 percent on European goods. Special attention is paid to products such as steel, aluminum and various components worth around 1 billion euros. The United States is Austria's second most important trading partner with an export volume of 16 billion euros.

KNILL urgently warned that the threatened tariffs could not only burden European industry, but also the American consumers. He emphasized that important products cannot simply be replaced and announced that steelworks cannot be built overnight. In this context, he appealed on both sides to return to the negotiating table to avoid retaliation, since these ultimately harm both sides.

Austria's economic challenges

The discussion about trade tariffs falls into a time when Austria's budget deficit rose to 4.7 percent in 2023, which is above the EU requirements. Knill sees Austria's credibility in danger and describes the country as a problem child. In order to keep itself under the 3 percent mark for the deficit, the government has gained seven years through an EU procedure, but there are no clear reform measures so far.

Special explosiveness gains the situation in view of the necessary reforms in the areas of pensions, health and federalism. Around 30 billion euros flow into the pension system annually. Knill's demand for a retirement age of 70 years - an approach that is discussed in Denmark - is still a taboo in Austria. For comparison: the real retirement age in Austria is currently 62 years.

The role of tariffs in global trade

The debate about tariffs is closely interwoven with globalization and free trade. Since the 1950s, tariffs have been gradually reduced worldwide, with the aim of increasing prosperity. President Trump's politics to increase tariffs again is seen as part of a creeping trend towards protectionism, which has strengthened since the financial crisis in 2008/2009. Customs often serve as a means of pressure in foreign policy to provide manufacturers from their own country.

The world trade organization (WTO) promotes the liberalization of world trade and guarantees the principle of the most favorable among its 166 members, but has difficulty enforcing the effectiveness of their rules, especially with regard to subsidies. The United States, once a pioneer in reducing tariffs, exerts pressure on the WTO arbitration court on the international trade order.

forecasts and possible effects

experts already warn of an impending trade war that could increase prices for many products. Forecasts indicate that an increase in tariffs and commercial barriers could lead to a decline in wealth. Particularly economically tense countries such as Germany could then be significantly hit by American import tariffs of 10 to 20 percent, which could cost between 127 and 180 billion euros. This not only leads to a burden on consumers, but could also weaken demand and boost inflation.

While some production costs could increase, the hope that a trade war can be averted through diplomatic efforts. It remains to be seen whether both the EU and the United States are willing to deal constructively in order to cope with these economic challenges.