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 Trump’s policies, which can be announced or rescinded on a moment’s notice with little explanation, made the situation even worse.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]

You have already tried to harm the Russians with sanctions. You are left without cheap energy, noncompetitive with the Chinese. You have harmed yourself much, much more than the Russians. Now it will be the same. Your businesses will go to the USA, where energy is cheaper and they do not have to pay customs duties. And you will remain at odds with both the USA and the Russians.

 

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.