Commercial deal with the USA: German economy speaks of fatal signal

The German economy is critical of the European Union trade agreement with the United States. The agreement sends a fatal signal because the EU accepts painful tariffs, says Wolfgang Niedermark from the Federal Association of German Industry (BDI) about the deal achieved.

“Because even a 15 percent duty will have immense negative effects on export -oriented German industry.” At least it is positive that another escalation spiral was initially averted.

The chief managing director of the Chemical Association VCI, Wolfgang Große Entrup, sees this: “Anyone who expects a hurricane is grateful for a storm.” Nevertheless, the agreed tariffs are too high. “Europe’s exports lose competitiveness.”

After weeks of negotiations between the EU and the United States, US President Donald Trump and EU Commission President Ursula von der Leyen in Scotland agreed on a trade agreement. This provides for a US of 15 percent of most EU imports-also for cars for which one inch of 27.5 percent currently applies, as well as for semiconductors and pharmaceutical products for which much higher tariffs had stood in the room. The customs set remains 50 percent on steel and aluminum.

The Leyen said that the EU had achieved that the tariffs were abolished to a number of strategic products on both sides, for example for certain aircraft parts, chemicals or agricultural goods. Some details of the agreement would have to be clarified in the next few days and weeks, said the head of the EU Commission.

The German Foreign Trade Association called the customs cleaning with the United States a “painful compromise”. Every percent inch is one percent too much, explained the President of the BGA industry association, Dirk Jandura. “For many of our dealers, the customs surcharge means an existential threat.” Even if there is now security over the trade conditions, supply chains would change and increase prices. “The agreement with the USA will have a noticeable impact here in the country. It will cost growth, prosperity and jobs.”

The BDI criticized the further high tariffs on steel and aluminum. That is an additional deep blow. “This continues to put pressure on a key industry, which is already with enormous challenges in international competition and through the transformation,” said Niedermark. The EU must now show that it is more than an internal market. “We need a strategy for a competitive and resilient economy as well as the political will to play confidently in global power structure.”

The director of the Institute of German Economy, Michael Hüther, warned of further fernations from Washington. “You can’t trust that there is now peace,” he told the newspapers of the Funke media group. “Trump never completely takes off the customs threat.” This is also why a more powerful EU negotiating strategy would have been useful.