German businesses voice worries over custom arrangements in trade policy review
The German Chamber of Industry and Commerce (DIHK) has voiced concerns about the recently agreed-upon EU-US trade deal, citing the imposition of a 15% tariff on most EU exports to the U.S., including German industrial exports. This tariff, they warn, will have a substantial negative economic impact on Germany's export-dependent economy.
At the heart of these concerns is the 15% tariff on car exports and many other goods, which significantly increases costs for German exporters. Although this tariff is lower than the initially threatened 25% on cars, it still poses a significant challenge. Steel exports remain subject to a punitive 50% tariff, adding further strain on metal-dependent industries.
To mitigate these risks, German firms are being forced to reevaluate and diversify their supply chains, including investments in the U.S. and Eastern Europe. The deal also necessitates a shift towards electric vehicles and green technologies to align with EU net-zero goals and counter U.S. protectionism.
Despite some relief at avoiding a full trade war, the DIHK views the deal as a costly compromise that harms German and European economic interests. Industry leaders have expressed skepticism about the deal’s stability, casting doubt on its long-term reliability.
The DIHK's position reflects a nuanced worry: while a worse tariff war was avoided, the agreement imposes tariffs that pressure Germany’s export sector, disrupt established supply chains, increase costs, and threaten economic growth and jobs. The deal is seen as a challenge to the competitiveness and resilience of German companies in the global market.
The survey conducted by the DIHK found that over half (58%) of German companies expect further burdens due to the US trade deal. The situation is particularly critical for businesses with direct US business, with 89% currently experiencing negative effects. Sustained trade policy uncertainty and concerns about new tariffs are identified as the biggest burden by 80% of companies with direct US business.
Among companies with direct US business, 74% are adjusting their business practices in response to trade policy changes. This includes changes in how they handle tariff costs, with 84% passing at least some of the additional costs on to their US customers.
DIHK CEO Helena Melnikov described the US trade deal as a "bitter pill" for many German companies, bringing additional burdens such as higher tariffs, more bureaucracy, and reduced competitiveness. The survey findings indicate that global market strategies are being affected by trade policy uncertainties.
The new start date for the US-EU trade deal is August 7. The EU and the US have recently reached an agreement in their trade dispute. The DIHK survey was conducted online between July 31 and August 4, with 3,355 companies participating. For one-fifth of the businesses, trade policy has no impact on their US business. Only 5% of the surveyed businesses anticipate positive effects from the US trade deal.
The data from the DIHK survey suggests that a significant number of companies are adjusting their business practices in response to trade policy changes. The new US-EU trade deal, while avoiding a full trade war, poses challenges that German companies must navigate to maintain their competitiveness in the global market.
- The industry sector, in particular German car and metal-dependent industries, faces significant challenges due to the newly agreed-upon tariffs in the EU-US trade deal, with steel exports still subject to a high 50% tariff and car exports facing a 15% tariff.
- The German Chamber of Industry and Commerce (DIHK) has expressed concerns about the financial impact of the 15% tariff on car exports and other goods, which they believe will increase costs for German exporters and potentially harm the country's export-dependent economy.
- Business leaders across Germany are forced to reevaluate and diversify their supply chains, including investing in the US and Eastern Europe, due to the new tariffs and trade policy uncertainties, as they strive to maintain their competitiveness in the general-news-worthy global market.
