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Tough trade conflict: Trump threatens Europe with tariffs!
Agreement between Mexico and Trump on tariffs could trigger global trade crisis. What effects on Europe and Germany?
Tough trade conflict: Trump threatens Europe with tariffs!
A surprise from Mexico: On Monday, the country reached a preliminary agreement with US President Donald Trump that will lead to the suspension of tariffs for a month. However, this development could just be the calm before the storm, as both China and Canada have already announced countermeasures. Economists warn of the threat of an escalation of a global trade war that could significantly damage both the US economy and the ailing Chinese economy vienna.at reported. Wolfgang Niedermark from the Federation of German Industries (BDI) expresses concern: “The Trump administration’s tariff policy is harmful to the growth prospects of the global economy.”
The consequences for Europe
The European economy is likely to be Trump's next target. When asked about possible tariffs against the EU, Trump responded with clear words: "Absolutely! The European Union has treated us so terribly!" This could have devastating consequences for Germany, as the USA's most important trading partner. The automotive sector, heavily dependent on exports to the US, could be hit particularly hard. Companies like VW, Audi and BMW that produce in Mexico would be directly affected because they export from there to the USA. There are already considerations about relocating production to the USA in order to forestall the tariffs, reports tagesschau.de.
Economists estimate that the trade conflicts could also have a major impact on the US economy. Trump's tariffs will increase on a large portion of US imports, which could increase consumer prices in the US by around 0.6 percent by the end of the year. This could further exacerbate the loss of purchasing power for American households, which are already suffering from inflation. However, there is also hope for the EU: If the community is prepared to import more LNG and defense equipment from the USA, the pressure on Brussels could be eased. Chancellor Olaf Scholz makes it clear: “As a strong economic area, we can shape our things and react.”