Tariff threat from the USA
German business for a prudent reaction
All alarm bells are ringing in the German economy – once again. The dispute over Greenland and Trump’s new tariff threats could dash hopes for economic recovery.
There is great outrage in the business community about Donald Trump’s new tariff threats. “The US President’s tariff threat is an inappropriate and damaging escalation for all sides,” says BDI President Peter Leibinger.
Of course: When it comes to the question of how Germany and Europe should react to Trump’s threats, a well-known dilemma emerges. A harsh reaction would be politically understandable, perhaps a means of putting the US President in his place.
At the same time, however, there is concern that the conflict over Greenland could degenerate into a real trade war – with massive consequences for the export-oriented German economy: at least ten percent of German exports go to the USA. BDI President Leibinger therefore warns: “It is important at the same time that the EU keeps the channels for dialogue open and pushes for de-escalation.”
“React prudently within the scope of possibilities”
According to the German Chamber of Commerce and Industry, politicians also have to walk a tightrope. Even if Trump’s combination of political goals with trade policy threats is putting a heavy burden on the German economy, politicians in Europe must not overreact now.
“Nevertheless, we plead with the German economy to continue to react prudently as far as possible and not to pull other instruments such as the ‘bazooka’ out of the drawer,” warns DIHK foreign trade expert Volker Treier.
The “bazooka” as a last resort?
The “bazooka”: This refers to the so-called “instrument against economic blackmail” that the EU agreed in 2023; At that time, it was mainly to arm itself against threats from China. Measures from the package could now be decided against the USA if Donald Trump carries out his threats.
These would be measures that could range from the taxes on US digital companies, which have been discussed for some time, to the exclusion of American companies from public contracts, to restrictions on capital movements.
Industry President Leibinger even understands that such serious measures are being discussed: “We also consider the considerations of counter-tariffs or the use of the instrument to ward off economic coercion to be plausible in the current phase.” What shows: Despite all the hope that a trade war can be avoided, the tone towards Trump within the economy has worsened.
Trade relations expand
Germany must therefore strengthen the diversification of its trading partners worldwide, says DIHK expert Treier. “The European Union’s agreement with Mercosur has now been concluded at the right time. Other agreements must follow, with India and Indonesia,” he demands.
There are many partners around the world who are establishing closer ties with the European internal market and establishing reliable trading relationships. And what is just as important, Treier continues: “To strengthen our own resilience by increasing the competitiveness of our European locations again.”
Perhaps the Americans will also notice the economic consequences of their president’s incalculable tariff policy. According to a study by the German Economic Institute, for example, investments by German companies in the USA almost halved last year.
