Trump's customs plan: Danger for the German economy!

Trump's customs plan: Danger for the German economy!

In a dramatic move, Donald Trump announced that if he returned to the White House, he would introduce drastic tariff increases on goods from Mexico, Canada and China. Trump intends to impose 25 percent tariffs on imports from these countries to address trade imbalances and improve conditions for the US, such as publishing house-jaumann.de reported. He looks in particular at the problematic import figures and the increasing number of illegal migrants and drugs that reach the USA via these neighboring countries.

The upcoming tariff increases could have serious economic consequences, not only for the USA, but also for the European and especially the German economy. During his first term in office, Trump had already tried to reduce the chronic trade deficit of over $773 billion with similar measures. How ZDF.de reported, Trump also intends to reduce the corporate tax rate from 21 to 15 percent, which will be financed by the additional tariff revenue. Experts warn that a 10 percent tariff increase on European goods could cause German exports to the US to fall by around 15 percent.

Inflation and price rise

The announced tariffs are borne by US companies, which usually results in higher prices for end consumers. This could further fuel inflation and put a strain on households' real income, forcing them to pay more for imported goods. Economists like Thomas Gitzel warn that the Federal Reserve may not be able to implement its planned interest rate policy as desired if inflation rises. While the euro is currently under pressure, the dollar could continue to appreciate as the global reserve currency, increasing import costs in the eurozone. At the same time, experts fear that China could direct more of its exports to Europe due to the tariff increases, which could lead to an oversupply of imported goods.