Bavaria's industry under pressure: dollar weakness and tariffs threaten exports!

Bavaria's industry under pressure: dollar weakness and tariffs threaten exports!

Bavaria's industry is currently facing significant challenges, primarily caused by the devaluation of the US dollar. Since the beginning of the year, the dollar has fallen by 12 percent compared to the euro, which has direct consequences for the competitiveness of Bavarian products. The exchange rate has negatively affected not only the value of the dollar, but also currencies pegged to it, making it even more difficult to sell goods. In addition, the expensive production at domestic locations puts an additional burden on Bavarian companies. Borken newspaper reports that market shares in China have fallen in recent years and the exchange rate environment is exacerbating the impact of tariff increases by US President Donald Trump.

Uncertainty about the duration of the dollar's weakness adds to the worrying situation. While some financial experts expected a stronger dollar at the start of the year, the reality is different. The ongoing level of U.S. national debt raises additional concerns about U.S. financial stability, reinforcing the consensus in the financial industry that dollar weakness will continue.

The Impact of Customs Packages

Another problem is the tariff package announced by US President Donald Trump, which could put a significant strain on the Bavarian economy. Economics Minister Hubert Aiwanger expressed concern about the negative impact of this package on both sides of the Atlantic. Last year, Bavaria exported goods worth 29 billion euros to the USA, which is considered the most important export market for the Free State. A possible isolation of the USA could not only damage the Bavarian economy, but also affect American trading partners and consumers.

Aiwanger also warned of the threat of additional costs running into the hundreds of millions, which could affect many companies. Automobile manufacturers, suppliers, and companies in the chemical and mechanical engineering industries are particularly hard hit. From April 9th, a flat-rate import duty of 20 percent will be due on exports from the EU to the USA, while a duty of 25 percent already applies to cars from the EU. This clearly shows that Bavarian industry urgently depends on stable and fair trading conditions.

Bavaria's economic ties

Around 700 Bavarian-controlled companies are already active in the USA and secure over 700,000 jobs. These companies contribute more than 130 billion euros to gross value added in the USA. At the same time, in 2024, Bavaria imported goods worth almost 13 billion euros from the USA. In order to secure its own economic ties, Bavaria relies on free and fair markets and plans to expand international trade relations, while Aiwanger is calling on the EU Commission to quickly negotiate with the USA to avoid a trade war.