When Will the Last Straw Brake the EU’s Camel Back? Trump’s Tariffs Pose a New Threat for Germany’s Stagnant Economy

"President Trump’s trade war adds another challenge to the incoming government’s attempts to revive Europe’s biggest economy.

Germany had hoped that a new government would revive its stagnant economy, but President Trump’s sweeping new tariffs are stoking worries that Europe’s biggest economy will fall short of its 0.3 percent growth expectations this year.

Jörg Kukies, Germany’s finance minister, met with the U.S. Treasury secretary, Scott Bessent, and U.S. trade representatives in Washington last week, and said on Thursday that the country remained hopeful that Europe would be able to reach a deal with Washington. But he added that negotiations alone would not be enough.

“We do need a strong reaction,” Mr. Kukies told the BBC. “It would be naïve to think that if we just sit there and let this happen, things will get better.” He said that he believed Washington was expecting the European Union to respond, but called for it to be in “a measured and constructive way.”

Mr. Trump imposed a 20 percent tariff on European Union goods, and a 25 percent levy on cars and automotive parts. But Monika Schnitzer, a professor of economics at the Ludwig-Maximilians University of Munich who is an adviser to the German government, said the uncertainty created by Mr. Trump’s policies, which can be announced or rescinded on a moment’s notice with little explanation, made the situation even worse.

“Companies can adjust to tariffs, but not to threats that change by the hour,” she said. “That damages the economy.”

German carmakers were already bracing for the effects of the 25 percent tariffs that Mr. Trump announced last week and that go into effect on Thursday. Automaking is Germany’s largest industry, and the United States is its most important export destination.

Analysts at Bernstein, a financial research firm, have predicted that the new measures would cost Volkswagen, BMW and Mercedes-Benz, the country’s three leading automakers, $11 billion overall.

The auto companies have assembly plants in the United States but they will not be immune from the tariffs because most vehicles are assembled with parts that come from a patchwork of countries. In recent weeks, sales for BMW and Volkswagen have jumped in the United States, as consumers scramble to get ahead of expected price increases caused by Mr. Trump’s new tariffs.

Calling the sweeping tariffs “a frontal attack on world trade,” Dirk Jandura, president of the German trade association BGA, urged the European Union to swiftly enact counter-tariffs in an effort to end the trade dispute.

Mr. Jandura also urged Germany’s export-dependent industries to rethink their business model. “This is also a wake-up call for us: We have to become more competitive ourselves,” Mr. Jandura said.

But German officials warned that the trade war would ultimately hurt Americans more than the targets of the tariffs. “For consumers in the U.S., the day will not be Liberation Day, but Inflation Day,” Robert Habeck, Germany’s economy minister, told reporters." [1]

1.  When Will the Last Straw Brake the EU’s Camel Back? Trump’s Tariffs Pose a New Threat for Germany’s Stagnant Economy. Eddy, Melissa.  New York Times (Online) New York Times Company. Apr 3, 2025.
 

 

Trump Is Promising a Manufacturing Renaissance. Is That Even Possible?

 

"President Trump’s imposition of tariffs on a scale unseen in nearly a century is more than a shot across the bow at U.S. trading partners. If kept in place, the import taxes will also launch an economic project of defiant nostalgia: an attempt to reclaim America’s place as a dominant manufacturing power.

In the postwar heyday of American manufacturing, which endured into the 1970s, nearly 20 million people once made their living from manufacturing. The United States was a leading producer of motor vehicles, aircraft and steel, and manufacturing accounted for more than a quarter of total employment.

By the end of last year, after a fundamental reordering of the world economy, manufacturing employed about 8 percent of the nation’s workers.

Now, the country is wealthier than ever. Yet the economy looks, and feels, quite different — dominated by service work of all types, both lucrative and low-wage. Industrial hubs in the American interior have often withered, leaving many strongholds of Mr. Trump’s base on the economic fringes.

Protectionist industrial policies, of varying methods and attitudes, have been on the rise for a decade — from the time Mr. Trump began his first campaign for president in 2015 through the presidency of Joseph R. Biden Jr. and now with Mr. Trump in the Oval Office again.

But the president’s announcement, at a flag-draped Rose Garden ceremony on Wednesday, represented a tectonic shift in U.S. economic policy, the fullest repudiation of an embrace of global free trade that began on a bipartisan basis in the 1980s.

“With today’s action we are finally going to be able to make America great again — greater than ever before,” Mr. Trump said. “Jobs and factories will come roaring back into our country.”

A blog post last month on the White House website declared the president was positioning the United States as a “Global Superpower in Manufacturing,” and claimed credit for a slew of recent U.S. investment announcements by companies including Nvidia, the global leader in advanced computer chips, and big automakers.

An expansive cohort of economists and business leaders remain deeply skeptical of the tariff campaign, however, and of its ability to reverse the decades-long drop in manufacturing employment — a decline with various global causes and unclear domestic remedies in an age of factories dominated by robotics.

While disagreement about Mr. Trump’s prescription for America’s manufacturing decline is widespread, few experts dispute his general diagnosis — echoed by a new breed of conservatives, including Vice President JD Vance — that deindustrialization caused a sort of pain that went unnoticed for too long.

A paper published this year by M.I.T. details the impact that the surge in imported Chinese goods at the dawn of this century had in the following years. It finds that while heartland regions hit hardest by this “China Shock” have rebounded somewhat, the individual workers whose jobs were affected have not.

Since the late 1970s, a powerful stew of forces has led to the offshoring of many factory jobs. As U.S.-based multinational corporations matured, executives and activist shareholders realized that they could often increase production at lower wages overseas, enabling higher profits and reduced prices for domestic consumers.

State and federal policymakers, frustrated by testy battles with labor unions in that era of inflation, often supported such adaptations by globalizing firms.

Over the years, the relatively high value of the U.S. dollar has made goods produced by exporters generally more expensive. And the nation’s trade deficits — in which American consumers buy more things from abroad than the value of things American producers sell abroad — are also a function of affluence.

But the economic story of the American 21st century has also been shaped by the deliberate pursuit of freer trade in the hope of lower prices, with the knowledge that doing so would put U.S. manufacturing employment at risk.

“The funny thing about finance and economics is that we don’t really advance or learn anything over time, we just cycle through the same things, over and over, in different ways,” Brent Donnelly, the president of Spectra Markets, a market research firm, argues. “We vilify mercantilism and lionize free trade but are forced to rethink these religions when income inequality shatters social cohesion and decades of unreciprocated tariff cuts create an unlevel playing field.”

The Biden White House tried to remedy these socioeconomic dilemmas with a carrot-style approach to industrial policy. It sought to promote labor union empowerment across all sectors, but especially manufacturing, by backing groups like the United Automobile Workers in old industries and subsidizing new industries like green energy, with made-in-America qualifying provisions.

That approach — which will at least partly live on through the investments it spurred in the early 2020s and subsidies passed by Congress — was cut short in November. Now Mr. Trump’s style of industrial policy, based on the import tax “stick” of tariffs, is on the clock.

The push not just to preserve U.S. factory employment, but potentially to expand it, has helped Mr. Trump’s trade campaign garner some support among figures on the labor-oriented political left, like Shawn Fain, president of the U.A.W.

Abby Samp, a global industry analyst at Oxford Economics, said that “while the tariffs will likely have the effect of transferring some automotive production to existing U.S. plants, it will also raise the cost to U.S. manufacturers and households.”

Some analysts, however, are outspoken in laying out the risks in play.

The current tariff push is “an own goal,” according to Omair Sharif, founder of the research firm Inflation Insights, which tracks the precise movements of price changes across industries.

Recession odds have spiked among forecasters. And more than 40 percent of U.S. imports are inputs into domestic production, so there is also an imminent danger that much higher tariffs, if maintained, could hurt U.S. manufacturers, too.

Brad Setser, a senior fellow at the Council on Foreign Relations, argues that there was a more “moderate” way for the president to go about these trade actions. Mr. Setser, a former official at the Treasury Department and the Office of the U.S. Trade Representative in the Biden administration, generally supports a more hawkish approach to global trade.

Mr. Setser was among the officials who spearheaded early support for the whopping 100 percent tariffs on cheap Chinese electric vehicles. Their fear was that — if left to the whims of globalized capital markets — China’s BYD, the world’s largest manufacturer of E.V.s, could take a significant tranche of the American car market by storm and cause another “China shock” of sorts, which could have cost many U.S. auto workers their jobs.

But Mr. Setser says he still views tariffs as more of a targeted, defensive tool than one meant to address a chronic job loss.

“In most cases,” he argued, “the end result of tariffs is that it doesn’t solve a trade deficit, it just means you trade less, you import less, you export less, the overall deficit doesn’t typically change.”

Despite some of the tacitly acknowledged upsides of the first Trump administration’s trade wars, the U.S. trade deficit — the gap between imports and exports of goods — was as large as ever as Mr. Trump left office, and it has only grown since.

Manufacturing job growth has also flatlined since 2019, despite the Biden era initiatives.

That’s partly because despite a boom in manufacturing construction, modern factories simply do not need as many workers as they used to.

Reflecting on the arc of the “Trump 2.0” tariff campaign, Arthur Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations, said, “It’s not completely and totally insane, but it is extremely disruptive.”

Mr. Wheaton said he did not mind the targeted use of tariffs. But he is turned off by the current Trump White House’s approach to trade negotiations — which has changed day by day, and in the case of Canada come with a threat against national sovereignty if U.S. demands are not met.

Mr. Trump’s “approach to conflict” has been “so left field you need binoculars,” he said, adding that such a volatile approach is also bad for business and for fostering manufacturing jobs.

Nick Iacovella, the executive vice president for the Coalition for a Prosperous America, a research and advocacy group representing domestic manufacturing and agricultural interests, supports a robust global “reciprocal tariff strategy” and said the White House announcement, which many thought might be a bluff, was “much better than I thought.”

Mr. Iacovella, a former Senate aide to Secretary of State Marco Rubio, worries that free-trade voices in the Republican coalition will see the tariff announcements as the starting line for “a race to the bottom” of sorts — “meaning that we’re going to prioritize other countries’ lowering their trade barriers so that we lower ours,” he said. “That is simply free trade just by another name.”

Those in Mr. Iacovella’s camp hope that Mr. Trump’s more protectionist allies prevail in ongoing debates and that higher tariffs stay in place long enough to lure factories back to the country.

“You could also invest in industrial policy, domestic production tax credits,” he said. “That could further incentivize companies to add capacity and investment in the United States.”

But what lies in store along Mr. Trump’s tariff path in the coming months remains, characteristically, in flux.” [1]

 1. Trump Is Promising a Manufacturing Renaissance. Is That Even Possible?Talmon Joseph Smith.  New York Times (Online) New York Times Company. Apr 3, 2025.

Tarifai kelia pavojų „farmacijos kompanijų“ mokesčių prieglobsčiui --- Segmentas didžiąją dalį pelno gauna JAV, tačiau perkelia mokesčių naštą į tokius rojus, kaip Airija

 

 „2019 m. „Pfizer“ pardavė JAV vaistų už 20 milijardų dolerių. Jos federalinis mokesčių indėlis: nulis.

 

 Šis atskleidimas buvo Senato Finansų komiteto tyrimo, kurį atliko demokratų partijos darbuotojai, dalis, paskelbto kovo mėn., kuriame buvo ištirta, kaip JAV farmacijos milžinai išnaudoja spragą, atsiradusią dėl 2017 m. Trumpo mokesčių pertvarkos, siekdami perkelti pelną į užsienį.

 

 Ši strategija buvo puiki „ farmacijos milžinų“ pelnui, taip pat tokioms šalims, kaip Airija. Tačiau prezidento Trumpo prekybos karui įsibėgėjus, šis modelis gali pradėti irti.

 

 Trumpas jau išskyrė farmacijos įmones ir tokias šalis, kaip Airija, kurios naudojasi mokesčių vengimo žingsniais. Nepaisant mažo dydžio, Airija pernai turėjo 87 mlrd. dolerių prekybos su JAV perteklių – didesnį, nei bet kurios kitos šalies, išskyrus Kiniją, Meksiką ir Vietnamą.

 

 „Airija buvo labai protinga“, – praėjusį mėnesį sakė D. Trumpas. „Jie atėmė iš mūsų farmacijos įmones“.

 

 Trečiadienį D. Trumpas paskelbė apie plačius abipusius muitus, motyvuodamas kitų šalių JAV prekėms taikomomis kliūtimis. Priemonės apima 20 % tarifą Europos Sąjungai ir tikimasi, kad jos turės įtakos beveik visoms pramonės šakoms. Didžiosios farmacijos įmonės lobistinės veiklos siekia išimčių, teigdamos, kad tarifai pakenks pacientams ir atgrasytų investicijas į mokslinius tyrimus ir plėtrą.

 

 PwC analizė apskaičiavo, kad metiniai farmacijos ir medicinos prietaisų tarifai gali padidėti nuo 500 mln. dolerių iki 63 mlrd. Jei šalies tarifai būtų taikomi pagal sektorių, į kuriuos įeina farmacijos produktai, jie galėtų veikti, kaip dvigubi tarifai.

 

 Skirtingai nuo tokių šalių, kaip Kinija, Airija nepadidino savo prekybos disbalanso, tapdama pigios gamybos centru. Vietoj to ji tai padarė, pasiūlydama palankų mokesčių režimą, kuris pritraukė JAV įmones, ypač technologijų ir farmacijos srityse, siekiančias sumažinti savo mokesčių sąskaitas, perkeliant intelektinę nuosavybę arba IP į užsienį.

 

 Didžiąją dalį apmokestinamųjų pajamų užsiregistravę užsienio dukterinėse įmonėse, tokiose šalyse, kaip Airija, Amerikos farmacijos įmonės, tokios, kaip Pfizer, AbbVie, Johnson & Johnson, Bristol-Myers Squibb ir Merck, sugebėjo sumokėti nedidelį pajamų mokestį JAV, nepaisant to, kad didžiąją dalį savo pelno generuoja čia.

 

 Pasak UBS analitiko Trungo Huynho, 2023 m. Airijai teko apie 40 % JAV 101 milijardo JAV dolerių prekybos biofarmacijos deficito.

 

 „Mes bandysime ištaisyti daugybę šių mokesčių sukčiavimo atvejų“, – neseniai „All-In“ podcast'e sakė JAV prekybos sekretorius Howardas Lutnickas. "Airija yra mano mėgstamiausia... Sakytumėte, Airija, ką jie daro? O, jie turi visą mūsų IP."

 

 „Didžiosioms technologijų“ įmonėms JAV tarifų padidinimas būtų nepatogumas, tačiau jį būtų galima suvaldyti, atliekant tam tikrus teisinius ir apskaitos manevrus.

 

 „Farmacijos milžinai“ turi didesnę problemą: Airija tapo svarbiu ne tik pelno perkėlimo, bet ir gamybos centru. Tokia sąranka gali tapti įsipareigojimu, nuo kurio įmonės negali lengvai pasitraukti, – sakė Užsienio santykių tarybos vyresnysis bendradarbis, užsiimantis pasaulinės prekybos klausimais Bradas Setseris. „Jūsų mokesčių strategija visiškai prieštarauja tarifui“, – sakė jis.

 

 Pfizer atstovė rašė, kad Senato finansų komiteto reitingo nario Rono Wydeno (D., Ore.) paskelbta informacija nėra tikslus 2017 m. mokesčių mažinimo ir darbo vietų įstatymo poveikio Pfizer atvaizdas. Ji sakė, kad „Pfizer“ per pastaruosius ketverius metus JAV sumokėjo daugiau, nei 12,8 mlrd. dolerių pajamų mokesčių.

 

 Vaistams istoriškai netaikomi tarifai, siekiant apsaugoti pacientų prieigą prie būtiniausių vaistų. Tai reiškia, kad pramonė dabar stengiasi ruoštis, sakė Chrisas Desmondas, PwC JAV pasaulinės prekybos paslaugų komandos vadovas.

 

 Siekdamos sumažinti tarifų naštą, įmonės išskaido vaistų kainą, kad atskirtų fizinius komponentus, tokius, kaip sudedamosios dalys ir pakuotė, nuo nematerialių, tokių, kaip patentai ir honorarai. Desmondas sakė, kad tai ne visada gali būti tarifinė. Tuo pačiu metu jos kaupia atsargas JAV.

 

 Ilgalaikėje perspektyvoje didžiosios farmacijos įmonės siekia perkelti daugiau gamybos į JAV. Neseniai Eli Lilly ir Johnson & Johnson paskelbė apie ketinimus per ateinančius ketverius ar penkerius metus investuoti daugiau nei 80 mlrd. dolerių JAV.

 

 Šie didelio masto projektai užtrunka, todėl, greičiausiai, įmonės artimiausiu metu nesumažins užsienio gamyklų. Tačiau didėjant tarifų ir mokesčių kodekso pakeitimų rizikai, įmonės rimtai žiūri į perkėlimą, ypač į naujesnius, didelės maržos produktus.

 

 Rezultatas yra tas, kad pelningumas bus paveiktas bet kuriuo atveju: užjūrio prekėms gali būti taikomi tarifai, o vietinei gamybai kyla didesnės darbo sąnaudos.

 

 Airijos mokesčių planui taip pat gali turėti įtakos šiais metais besitęsiančios diskusijos dėl tam tikrų JAV mokesčių kodekso dalių atnaujinimo. Aptariamuose respublikonų pasiūlymuose politikos formuotojai, greičiausiai, bendradarbiaus, naudodami morkų ir lazdų mišinį, kad būtų patraukliau pranešti apie pelną JAV – ir brangiau jį rezervuoti tokiose vietose, kaip Airija. Griežtesnė JAV mokesčių politika, verčianti farmaciją pranešti apie didesnį pelną namuose, gali sumažinti pramonės pelną maždaug 5 proc., apskaičiavo UBS.

 

 Daugelį metų farmacijos įmonės tikėjo, kad rado tobulą spragą – gaudamos didžiulį pelną JAV, mokėdamos Airijos mokesčių tarifus. Dabar tai gali blogai atsiliepti.“ [1] 

 

1.  Tariffs Jeopardize Big Pharma's Tax Shelter --- The segment reaps most of its profits in the U.S. but shifts its tax burden to havens such as Ireland. Wainer, David.  Wall Street Journal, Eastern edition; New York, N.Y.. 03 Apr 2025: B10.