Ifo boss calls for reforms – Trump tariffs endanger German recovery!

Ifo boss calls for reforms – Trump tariffs endanger German recovery!

Economic challenges in a region often require fundamental reforms. Clemens Fuest, the head of the Ifo Institute, has called for comprehensive measures in recent days to ensure positive developments. In his analysis, Fuest emphasizes that additional growth requires both more jobs and smarter working. In particular, a reduction in bureaucracy and better incentives for employment are crucial in order to sustainably strengthen the economy.

Fuest expressed an optimistic forecast for the coming years. However, he warns of the uncertainties resulting from the ongoing customs dispute with the USA. In particular, the assumption that nothing will change in customs policy until 2026 plays a crucial role in the Ifo Institute's economic forecasts. If tariffs actually rise to up to 50 percent, this could seriously jeopardize the economic recovery of the European Union.

The customs dispute and its effects

The issue of tariffs has had a major impact on trade relations between the US and the EU in recent years. Recent legal developments show how fragile the situation is. As the daily news Reportedly, an international trade court in New York has declared several Trump-ordered tariffs unlawful. However, this decision, which was valid for a short time, was overturned in less than 24 hours by an appeals court in Washington. 

The case drew a variety of reactions, from Trump, who called the decision "wrong and political," to his economic advisers, who interpreted the repeal as a "major victory." However, uncertainty remains as the tariffs, which affect most goods, are applied to both universal tariffs of 10 percent and specific tariffs on goods from Canada, Mexico and China.

Future prospects and negotiation tactics

The uncertainties in the trading environment pose risks for the planning of many companies. They need clear framework conditions in order to be able to run their business successfully. Given the unstable trade situation, with certain tariffs remaining in place, the EU is negotiating with the US to avoid additional tariffs.

Trump himself uses tariffs as a strategic tool to achieve better trading conditions. Additional legal battles appear inevitable as his advisers announce alternative methods of imposing tariffs. Fuest warns that these uncertainties in the trade landscape could threaten the EU's economic recovery, making the need for fundamental reforms all the more urgent.