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Tariffs from Trump's strategy: opportunities and risks for German companies!
High US import tariffs are impacting the global economy, while Germany is relying on financial packages to boost growth.
Tariffs from Trump's strategy: opportunities and risks for German companies!
The US administration has imposed high import tariffs on Mexico, Canada and China, causing significant legal and economic problems. However, these tariffs were modified after a few days with regard to Mexico and Canada. The German political environment is responding to these developments with comprehensive financial programs for rearmament and infrastructure development that could promote economic growth in the coming years.
In Germany, economic growth is already evident on the markets: the DAX reached new all-time highs, and MDAX values also rose accordingly. European stocks have outperformed US stocks since the start of the year. In addition, the euro has gained in value against the US dollar. A historic increase in interest rates of half a percentage point on the bond markets is the result of debt-financed projects such as Focus Online reported.
Consequences of high tariffs
The increase in US tariffs, particularly under President Trump, could pose both challenges and new investment opportunities for European companies. According to Dr. Tilman Dumrese from LGT Private Banking is likely to benefit companies with production sites in the USA from the tariffs, while foreign producers will face a greater burden. Trump intends to continue the reindustrialization of the U.S. economy during his second term, pursuing an approach that emphasizes cheap energy, deregulation, tax cuts and high import tariffs.
Higher tariffs could particularly hit the automotive industry, especially manufacturers with cross-border supply chains. Tariffs of 10-25% on certain goods from China, Mexico and Canada and 25% on steel and aluminum from Europe are possible. Tariffs on Chinese imports are already in force, while further measures are currently being negotiated. Companies that produce locally in the US are less vulnerable to tariff charges. In 2022, around 4 million vehicles were built in Mexico, 75% of which were exported, mainly to the United States. German automobile manufacturers produced around 900,000 vehicles in the USA in 2023, while imports from Germany were 400,000 vehicles. The chemical industry and European pharmaceutical companies, which exported products worth 36.4 billion euros to the USA in 2023, are also affected by the higher import tariffs LGT stated.