Exports Could Decrease by 2 Percent Due to Tariffs
The Ifo Institute reports on the assessment by Stormy-Annika Mildner, Executive Director of the Aspen Institute Germany, regarding the Biden administration’s trade policy in the U.S. This policy has focused on supporting American workers and reindustrialization. The goal is to reduce dependency on global supply chains. This policy could continue under a potential Kamala Harris administration.
In contrast, a second Trump administration would pursue an aggressive tariff policy, which could lead to trade conflicts.
The nomination of Kamala Harris as the Democratic presidential candidate has significantly improved their chances in the November elections. As a result, the Republican candidate Donald Trump has been put on the defensive.
Consequently, the U.S. remains a controversial trade partner.
Impact of Trump’s Policies
The U.S. is a significant trade partner for Germany in both goods and services sectors.
However, the tariffs announced by Donald Trump would reduce German exports by about 2 percent. Part of these losses could be offset by increased exports to other countries.
Additionally, U.S. economic performance would decline, mainly due to a decrease in private consumption. There is a risk of reduced purchasing power, higher unemployment, and a temporary confidence shock.
If Trump wins the election, it could lead to significant disruptions in the global trade system and transatlantic trade relations. Exporting countries, in particular, would be negatively affected.
Geoeconomic Competition Between the U.S. and China
According to the Ifo Institute, the U.S. will intensify geoeconomic competition with China, regardless of the outcome of the U.S. elections.
The U.S. is pursuing a strategy of economic decoupling from China, which could lead to a divided world. This would increase pressure on European allies to choose between the U.S. and China.
In this situation, Europe must strengthen its strategic autonomy and improve its capacity to act in global politics.
Source: www.kloepfel-consulting.com