Trump's customs policy: German economy on alert!

Trump's customs policy: German economy on alert!

Concerns about free trade are increasing in the German economy. President Trump has announced massive tariff increases, which initially led to market easing but fueled fears of an emerging trade conflict. As the FAZ reported that 92% of German companies fear higher tariffs on European products. In addition, 78% expect tensions between the USA and China to increase. More than 40% of company executives are also confident that Trump will follow through on his announcements — a jump from just 7% at the start of his first term.

The fears are not unfounded. 80% of companies expect increasing risks for the German economy, while 68% assume that American tariff policy will have a significant impact. There is also particular alertness among the population. According to the survey, 66% of citizens are seriously worried about the upcoming tariff increases. 44% of respondents expect the trade conflict to have a strong impact on their own economic situation and 29% expect it to have a limited impact.

The role of free trade

In this context, the value of free trade is increasingly overrated: 75% of the population react positively to the term “free trade”. The proportion of citizens who consider free trade to be extremely important has increased from 38% to 55% since 2017. The belief that largely eliminating trade barriers would bring benefits rose from 45% to 65%. This development also means that globalization is perceived more positively; Only one in three sees predominantly risks like these Deutschlandfunk stated.

Historically, tariffs have served as a protective measure for domestic producers. Tariffs are now closely linked to issues of globalization and free trade. The world has significantly reduced tariffs since the 1950s, leading to trade liberalization. However, the US has increased tariffs again under Trump, indicating a trend towards protectionism. Jürgen Matthes from the German Economic Institute points out that the tendency to restrict free trade has been gradually increasing since the financial crisis of 2008/2009.

Economic dependencies

A survey shows that the majority of Germans see Germany's economic development as dependent on international conflicts, particularly with regard to American politics and tariffs. The idea that a decline in free trade has negative consequences for the German economy is shared by many. At the same time, 49% of the population believes that Germany would be worse off economically without the European Union, while 70% of AfD supporters think the opposite. There is no consensus regarding the EU's approach to the threatened US tariff increases: 43% are in favor of counter-tariffs, while 36% are in favor of negotiations.

The current situation highlights the complexity of the trade policy challenges. Tariffs can not only serve as a source of income for states, but can also be used as a means of pressure in political negotiations. The US trade balance is negative, which signals the need for action, while German companies have to prepare for possible tax burdens. Free trade remains an important goal whose value is increasingly recognized by the general public.