Trade war is a downside scenario
Trade war is a downside scenario, and not just for the German
industry
The declines in German exports to Russia, which were caused by the EU
sanctions, among other things, and Brexit-related developments are two good
examples of just how vulnerable bilateral trade relations are to political events.
That is why not only German exporters and politicians are worried about US
President Donald Trump’s comments about potential punitive tariffs on US
imports.
In fact, the US government recently decided to introduce punitive tariffs
of 10% on steel and 25% on aluminium. The EU and other countries are exempt
for now, which means that the US so far focuses mainly on imports from China.
Consequently, China has announced import tariffs on certain US products. In
any case, the US comments have caused some worries among western US
trade partners, too, not least because Trump mentioned not only the steel and
aluminium industries, but also the automotive sector (and German companies in
particular) and complained of the US trade deficit versus the EU in this sector.
While the EU is currently exempt from the US punitive tariffs, an escalation of
the trade conflict between the US and the EU is no longer a completely
unrealistic scenario.
EU Forecast
euf:ba.18.j:184/nws-01