The IW expert Sultan speaks in Tagesschau24-InterView for a clear answer in Europe to Trump’s customs announcement. The EU can also target the US tech corporations.
Tagesschau24: How hard does Trump’s customs package meet the EU and specifically us in Germany?
Samina Sultan: We made various calculations. Of course it is still a bit confusing – which country now gets exactly how many tariffs receives and which goods are covered again with additional tariffs. We are roughly valued for Germany for over four years of the Presidency of Donald Trump for economic damage of around 200 billion euros. And according to our estimates in 2028, Germany’s economic output will be around 1.5 percent percentage points lower compared to a scenario without these customs increases.
Samina Sultan is Senior Economist for European Economic Policy and Foreign Trade at the Institute of German Economy (IW). Previously, the economist worked as a consultant in the scientific staff of the Council of Experts to assess the macroeconomic development. Her research focuses on trade and fiscal and industrial policy.
Trump only recognizes strength
Tagesschau24: That is why some observers now speak of a trade war. Do you go there?
sultan: It now depends a bit on how the EU will react. But it is indeed the case that we are increasingly seeing that this customs spiral turns and that the Trump administration is also quite willing to let this trade war escalate. And therefore you can slowly talk about a trade war.
Tagesschau24: From your point of view, are you a solution? Or is that more escalating?
sultan: In my view, the EU has so far tried to get the United States back to the table through negotiations so that a deal is negotiated. This has not fertilized, and now there are customs increases in the room, which the EU will also raise towards US imports. In my view, this is the right strategy, because Donald Trump once proved that he only recognizes strength. And in my view, a pure appeasement policy, in which one relates relatively arbitrary justifications of the United States regarding its customs policy, is not the right strategy.
New territory digital tax
Tagesschau24: Now it is always discussed about a tax on services. What could that look like?
sultan: A levy to services, i.e. an expansion of the customs conflict to the service sector – we enter a bit new territory. That is why the measures are still to be spelled here. But for example, we can lean on what some countries had already implemented with a digital tax. And that has been determined, for example, how much sales or how many users have certain tech companies in a country.
Tagesschau24: If you speak of the digital tax – what could such an inch look like on Instagram and Co.? We don’t pay any money for these services.
sultan: Exactly. So far we have been paying indirectly through our data. Of course, if you look at a certain sales of Instagram, for example, in a respective country or the number of users, you could say that a certain percentage is then charged. But as I said, we enter new territory. That is why you will see what is specifically considered. Of course, one can also think about tightening the customs regulations regarding trade in terms of services, also to exacerbate the regulations in the area. That would also hit the tech companies hard in the USA.
A question of competitiveness
Tagesschau24: At the beginning of an economic damage of 200 billion euros, they spoke for Germany in the next few years. How could Germany position itself now in order to recover to some extent?
sultan: At the moment we have the negotiations between the potential coalition partners for a new government in Germany. Since we are a very export -oriented economy and a country can only be as export -oriented as the quality of the location also gives, it is now all the more crucial that we are really making our own competitiveness significantly. In addition, of course, we have to acknowledge that the most important thing for us in the trade is the EU internal market and that we will reduce the strengths of trading barriers here. That must be the way forward now.
Damla Hekimoğlu asked the questions. The interview was edited for the written version.
