German Economy Faces Uncertainty Amid Trump's Policies

The shift in US leadership under Donald Trump is causing significant concern in Germany, with economists predicting increased uncertainty for the nation's already struggling economy. The president of the Kiel Institute for the World Economy, Moritz Schularick, emphasized Trump's preference for deals over a rules-based global economy, which could disadvantage German businesses. A survey by the Institute of German Economy revealed that many firms anticipate trade barriers and competitive disadvantages.

The potential for tariff increases could lead to a decline in German exports to the US by up to 15%, impacting the nation's GDP. Companies might opt to invest in the US to circumvent tariffs, further straining the German economy. In contrast, a trade conflict between the US and China could push China to redirect its exports to Europe, leading to price drops detrimental to European industries.

Industry leaders urge a coordinated European strategy in response to Trump's 'America First' policy, advocating for a unified EU approach to withstand reduced US support. European Commission President Ursula von der Leyen highlighted the importance of maintaining dialogue with the US to explore shared interests and uphold European values.

Despite the challenges, some see opportunities for Europe to strengthen its economic independence and foster innovation. However, the threat of a global trade war remains, with potential repercussions on supply chains and increased costs. As the EU navigates these complexities, maintaining robust transatlantic ties and developing a cohesive strategy are deemed crucial for economic stability and growth.