Trump before his second term: How financial markets and economists react to the US election

A second term in office for Donald Trump is causing concern for the German economy and at the same time boosting stock markets. The export nation Germany is particularly concerned about tariffs, which the Republicans announced during the election campaign to protect the US economy. An overview of the reactions:

Industry and foreign trade associations warn against trade restrictions

German industry is concerned about Trump’s return to the White House. “Across-the-board tariffs of ten or even 20 percent on all imports and 60 percent on imports from China would massively damage not only Germany and the EU, but also the US economy,” said the Federation of German Industries (BDI).

“The world needs fewer, not more, trade restrictions,” emphasized the President of the BGA foreign trade association, Dirk Jandura. “An American president can and must never be solely and exclusively “America first.” The USA is Germany’s most important trading partner and most important ally in a time of global upheaval. “We are counting on a continuation of the traditionally good transatlantic relations.”

Economists fear escalation and less growth

Economists expect that Trump could initially only impose selective, headline-grabbing tariffs next year and threaten further measures. “In isolation, such an escalation in trade tensions could result in us lowering our 2025 growth forecast for Germany (currently 0.5 percent) by around 0.2 percentage points and our forecasts for other European countries by around 0.1 percentage points,” said the economists at Berenberg Bank. If the USA actually imposed a tariff of ten percent on all imports from Europe, the damage could be even greater.

Commerzbank’s chief economist, Jörg Krämer, also explained: “The tariffs not only make German goods more expensive in the USA, but are also likely to lead to counter-tariffs from the EU, which would further burden foreign trade.”

According to the German Economic Institute, which is close to employers, the “worst case scenario” has occurred. It predicts a “trade war” that could cost the German economy up to 180 billion euros in four years.

The President of the Kiel Institute for the World Economy (IfW), Moritz Schularick, also viewed a Trump victory as negative. This “begins the most difficult economic moment in the history of the Federal Republic, because in addition to the internal structural crisis, we are now faced with massive foreign trade and security policy challenges that we are not prepared for.”

Stock investors are taking advantage – losses on stock exchanges in China

Investors reacted to Trump’s victory, which had been looming for hours, by buying on the German stock market. The German leading index Dax rose by a good one percent to 19,470 points around midday. In the meantime, the stock market barometer had risen even further and was even heading for a record high.

The larger Asian stock markets initially reacted differently. While things rose in Japan, the Chinese stock exchanges recorded losses.

Auto stocks in the red, Trump friend Musk’s Tesla with a strong plus

The automotive sector is a clear loser in German stock trading. Investors fear punitive tariffs from the USA on German imports. The price losses range from 3.7 percent for Mercedes-Benz to 5 percent for BMW to 6 percent for Porsche.

The shares of the electric car manufacturer Tesla, on the other hand, rose by more than 12 percent to just under $283 in premarket US trading. Tech billionaire and Tesla boss Elon Musk stood closely at Trump’s side during the election campaign.

Cryptocurrency on the rise

The Republican was also the favorite of the majority of the crypto community. After the US elections, Bitcoin rose to a record high of just over $75,000. On the Bitstamp platform, the price climbed to $75,080 after the polls closed. The oldest and best-known digital money has never been so expensive. Bitcoin reached its previous all-time high on March 13, 2024 with a price of $73,738.

Oil prices fall – Strong dollar weighed after US elections

Oil prices initially fell. The US dollar reacted to another Trump presidency with gains, which slowed demand for crude oil. Since crude oil is usually traded in dollars on the world market, gains in the American currency make the raw material more expensive in countries outside the dollar area. A barrel (159 liters) of North Sea Brent for delivery in January cost $74.19 in the morning. That was $1.34 less than the day before. The price of a barrel of US WTI for delivery in December fell $1.39 to $70.60.