London
CNN
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When German voters go to elections on Sunday, the country’s moral economy – and promises to fix it – will be in front of the mind. But Donald Trump’s Lump import tariffs will make that challenging task even more difficult for the new government.
Failure will be expensive.
If the parties are most likely to form a new governing alliance, they do not manage to kick-start the economic growth, “I hope … they know who are the next elections, and they are far away -Raj Raz will be AFD, “Karsten said. Bruzki, a senior economist at the Pan-European bank ING, echoes the apprehensions of others about the option of the German party.
The German economy has barely increased since the world’s third largest, epidemic. It shrunk in both 2023 and last year, posted the first back-to-back annual contraction in the early 2000s. And this year, according to the forecast of the International Monetary Fund, it is ready to grow to 0.3%.
It was not always so.
Between 2005 and 2019, the export-oriented economy was rich, cheap natural gas from Russia, inspired by a import-hungry China and relatively friction-free global trading environment.
But since then the world has changed dramatically, Trump has been presented the latest challenge to all important exporters in Germany with a return to the White House.
“A world that does not have free trade … The major economic mantra is problematic for Germany,” said Jacob Kirked, a senior companion of the Peterson Institute for International Economics, a Washington, DC-based think tank.
Economic reforms to promote development then not only want voters – and elections have shown that the economy is one of their two top concerns. – But it is also important for the prosperity of the current and future generations of Germany, not at least for the swelling rank of pensioners.
“An unpublished German economy is a stable, aging, sclerotic … German economy,” Kirkegard told CNN.
Exports have long been a major driver of Germany’s development. In 2023, the latest year for which data is available, export of goods and services is responsible for more than 43% of the country’s gross economic product – according to the World Bank, the largest stake in major economies.
The motor vehicle and their share, machinery and chemical products were the main exports of Germany last year, according to its statistics office.
Relying on foreign demand was attractive when China’s large-scale economy was growing rapidly and its consumers preferred to buy cars from well-established foreign vehicle manufacturers-like Volkswagen-Bajai-Jai-developed upstarts.
But China’s economy has slowed down in recent years, while its car manufacturer, such as electric vehicle manufacturer byd and Xpeng, have taken away market share from Western rivals, both homes and abroad, a so -called EV “revolution” Got speed as
To some extent, the German auto industry “has been a victim of its success,” Kirkeard said. Brands such as BMW, Mercedes and Audi, who found their fate in fossil fuel-fuel combustion engines, were quite naturally reluctant to throw a lot of money in cannibalism for their success and develop electric vehicles for their success. ”
He said that the Chinese EV manufacturer, as well as Tesla (TSLA), has proved to be much better … literally scaling to produce millions of cars, “he said.
Meanwhile, Germany’s energy-gazelling industrial firms are paying more for their main fuel, natural gas, before Moscow sent troops to Ukraine in 2022, inspired Europe to change its gas imports from Russia. , Which is with those with those with them. As a result, many Germans The firms have reduced production and some have also stopped.
“We are in the middle of deindustrialization,” said Lars Cromer, the chief economist of Gesamtmetall, a union of employers in the metal and electrical engineering industry.
A German government website is worrying for the economy operated by “highly specific industrial companies producing highly specific items”, putting it.
Crommer said that in addition to steep energy costs, high taxes and burden rules have also stopped the country’s industry.
More broadly, strict boundaries on government borrowings in Germany-known as “The Date Break”-have conducted very necessary investments, including the original structure and online public services.
“We have not done digital yet. The burden of our bureaucracy is more than in other countries … “Achim Wambach, president of Libyan Center for European Economic Research, said, or ZEW,
For months, Trump has been threatening to slap high tariffs on imported goods in America. Since assuming office in January, he has proved that he is ready to walk, announcing, for example, 25% duty on all steel and aluminum imports, is ready to be effective in March.
Then, last week, Trump ordered an inquiry whether the US should introduce mutual tariffs on imported goods, which means that American products would have to match the tariffs planted by other countries. And on Tuesday, he said that he planned to impose 25% duty on imported automobiles, semiconductor chips and pharmaceuticals in early April.
If foreign producers undergo most new tariffs for their American customers, their products may become less competitive than American-made counterparts.
According to official data, German exporters will be damaged, because America is their largest market, which represents 10% of all German exports.
The impact will be felt most eagerly by specific exporters, such as some German vehicle manufacturer, Wambach said.
“Every additional push (automakers) is bad news for the industry,” he told CNN.
According to Swiss research firm Prognos, about 1.2 million jobs in Germany depend on exports directly or indirectly to the US. According to the latest government data, this figure represents 2.6% of all jobs in the country.
The new tariff of Trump will depend to the extent to which the German economy will affect the overall levels on their final levels.
The central bank of Germany has seen a scenario in which Trump has introduced 10% universal tariffs and 60% of duties on imports from China, about which he spoke on the trace of the campaign.
It was found that the German economy “will be quite suffering”, with development, with a large -scale hit, Central Bank President Jochim Nagel said in a speech on Monday.
Even in the absence of direct tariffs on its goods, Germany may still feel pain from tariffs imposed on other countries.
Since assuming office, Trump has announced 25% duty on imports from Mexico and 25% duty on most products and Chinese goods from Canada. But some German vehicle manufacturers, including Volkswagen, export cars from their factories in Mexico to the US.
“The whole (global) economy is like a network, so if you make a tariff or a barrier … at a point, the whole world’s economy will feel more or less,” Michael Bohmar, the Chief Economist of Prognos Said.
He said that Mexico, Canada and China can redirect exports to the US to avoid Tram’s tariffs, possibly those products directly competing with German goods in those markets.
Over the next few years and beyond Germany growth will require much more than finding ways to deal with Trump’s tariff. The entire business model of the country may require an overhaul, as some have argued.
Böhmer agrees. If, he said, in the next decade, Germany fails to move from the “quite old” industries, such as the production of cars, machinery and steel, focusing on new techniques like Artificial Intelligence for the “future-oriented economy”, This “this” “will definitely be the third largest economy in the world.”
