Donald Trump will be President of the United States again next Monday. The goal of his economic policy: “America First”. The consequences for the German economy could be serious.
Long before Donald Trump will be President of the United States again next Monday, he caused a stir with his economic plans: the energy prices in the USA are also to decrease, and corporate taxes are also to be decreased. The money to finance tax cuts is said to get in by higher tariffs. The tariffs are also said to protect US companies from foreign competition.
USA with great Commercial deficits
The main reason for this attitude is the high US trade deficits with other nations. For example, the USA is the largest trading partner in Germany. For many years, Germany has benefited from this trade significantly more than the United States. This has been shown by the development of German trade since reunification.
After a break -in by Corona, the trade surplus has grown again in Germany in recent years and is now at a record level. And not only Germany has a big surplus in trade in the USA.
The largest trading partners in the United States are the neighboring countries Mexico and Canada. Then China and, again at a large distance, Germany follows Germany. But whether Mexico, Canada, China or Germany: The USA imports much more than it exports. Donald Trump wants to change this situation. That is why, in addition to Germany, China, Canada and Mexico are at the center of its customs threats.
Who pays for the tariffs?
Trump likes the word tariff, he says he says it as the most beautiful word in the dictionary. At the height of the tariffs, it is flexible. In the past few months, the future US president has asked 60 percent on imports from China and ten to 20 to all other imports. Another time he announced 25 percent inch for imports from the two neighboring countries Mexico and Canada.
In the past decades there have been clearly noticeable tariffs on certain products, but by no means in this width and at this height. According to the Kiel Institute for the World Economy, average customs in world trade is currently 2.5 percent.
Whoever pays for the tariffs in the end is not clear. The first option is that the foreign supplier will dispense with profits and reduces the price so that the final price for the consumer in the USA remains. The second option: The foreign supplier simply opens the customs amount to the price. In this case, consumers in the United States pay customs.
“The USA harm itself”
In the first presidency of Donald Trump, the tariffs were essentially on prices. If this would happen again, an inflation boost in the United States would result, many products would be significantly more expensive for American consumers. For Rolf Langhammer from the Kiel Institute for the World Economy (IFW), it is therefore clear: “The USA harm itself. This policy will be corrected in the medium term.”
What the possible tariffs for economic growth in Germany means, several economic research institutes in Germany have calculated, including the IFW and the Institute of the German Economy in Cologne (IW). Result: Germany would only lose economic growth to a manageable extent. In times of economic stagnation, however, this still hurts. However, China and especially the USA itself would be more affected.
Julian Hinz from the IFW therefore warns against overestimating the danger from exports back: “Most of what is produced in Germany, also remains in Germany. The rest of the USA goes to Europe, only then come the USA.”
Germany would lose several times
Even if the dependence on the USA is limited: the impending trade dispute comes for Germany. Because the long very successful German business model wobbles for a long time. A good part of German economic growth has come from export for decades. Cars, machines, chemical products: It is not necessarily high -tech, but rather middle technology that successfully export German companies. Unlike other countries, Germany has been preserved its industrial basis.
But that is now in danger. Lower energy prices, lower corporate taxes and at the same time avoid tariffs: For many German companies, the relocation of production to the USA becomes even more attractive, says the economist Markus Brunnermeier. He teaches at the US elite university Princeton and is considered one of the most renowned German economists in the USA: “Many companies will say that I have to invest in the USA instead of in Germany. This will result in relocations. The world will become different . “
More on this in the video of the Explainable
