EU-US customs agreement negatively impacts German economy

EU-US customs agreement negatively impacts German economy - Chancellor Merz bears the blame

The recently signed trade deal between Germany and the United States has raised concerns among various associations and economists, with many predicting significant disadvantages for German companies.

According to a survey, 46 percent of companies anticipate a deterioration in their competitiveness on the US market in the next 12 months. Moreover, 77 percent of companies see a strong to very strong burden due to tariffs imposed as a result of the deal.

The machinery industry, in particular, is feeling the brunt of the trade deal, with three out of four companies reporting a strong influence of US tariffs.

The trade agreement has been criticized by the Kiel Institute for the World Economy, which predicts a loss of 6.5 billion euros in GDP for the German economy in the first year. Associations like BDI, BGA, and VDMA have also expressed concerns about the potential massive disadvantages for German companies.

The trade deal has been a contentious issue, with some seeing it as a humiliation for Europe and a weakening of multilateral trade norms. The German Chancellor, Angela Merkel, was pressured during the negotiations to compromise on fundamental principles of rule-based global trade. This led to the EU agreeing to tariffs and concessions under US President Donald Trump's pressure.

The trade dispute has put Commission President Ursula von der Leyen under pressure, due in part to the German Chancellor's demand for a quick deal at any cost. This demand has been criticized by Dr. Sandra Detzer, economic policy spokesperson, and Julian Joswig, chairperson of the committee on EU affairs, who have accused Friedrich Merz, as Chancellor, of weakening the EU's negotiating line in the trade dispute with the USA.

The trade deal has created an asymmetrical outcome, with tariffs of 50 percent remaining in place for key industries like steel and aluminum, while the EU accepts US tariffs of 15 percent. Moritz Schularick, president of the Institute for World Economics, has criticized this trade policy as a "trade policy appeasement" and warns of long-term damage to the WTO.

As a result of the trade deal, companies are already considering relocating and establishing new supply chains. This uncertainty is not only affecting businesses but also the economy and the international trading system.

In light of these concerns, it is crucial for policymakers to address these issues and work towards a more balanced and fair trade deal that upholds the principles of rule-based global trade.

EU-US customs agreement negatively impacts German economy - Chancellor Merz bears the blame