Impending trade conflicts: USA expert Menne: “High tariffs would harm Trump himself”

High tariffs under US President Donald Trump could hit German companies hard, especially in the auto industry, and cost many jobs. But Simone Menne, President of the American Chamber of Commerce in Germany (AmCham Germany), warns against panic.

“There were many announcements during Trump’s first term in office, but not all of them were implemented into reality,” Menne told the German Press Agency shortly before Trump’s inauguration this Monday. “I advise calmness. There is no need to rush.”

“High import tariffs would also harm President Trump and the US economy itself,” said the USA expert. “Then prices in the US would rise, inflation would increase and the dollar would become more valued, making US exports more expensive. That wouldn’t be good for the US. Companies there don’t like uncertainty either.”

Economists alarmed by tariff plans

Trump has threatened to increase tariffs on imports from Europe to 10 to 20 percent and on imports from China to 60 percent. On his first day in office, he wanted to impose high import tariffs on all goods from Mexico and Canada as well as additional tariffs on goods from China. For comparison: In Trump’s first term in office, the average tariff rate in the USA was around 3 percent, according to a Commerzbank study.

Economists fear trade conflicts and counter-reactions from affected countries, which in the worst case scenario would destroy hundreds of thousands of jobs in Germany. Trump’s tariff plans could cost Germany one percent of its economic output, Bundesbank President Joachim Nagel has warned.

Are German companies moving to the USA?

In the short term, German companies could even benefit from high US tariffs, says Menne, referring to a study by the Kiel Institute for the World Economy (IfW). Because if other countries like China had to pay even higher tariffs, German companies would be at an advantage in relative terms.

Menne also does not expect horror scenarios that German companies will migrate to the USA on a large scale in order to avoid tariffs and benefit from low taxes under Trump. “Large investments take years to make. Moving out of Germany would involve high costs for companies. You don’t just give up on a large, high-turnover market like Germany.”

Many German companies already have a strong presence in the USA, said the former Lufthansa CFO. “They may then invest even more locally.” The middle class has a harder time. “Many companies are world market leaders based in Germany; they cannot simply set up a factory somewhere else overnight.”

“Don’t talk about a recession”

Menne warned against too much pessimism. “We in Germany are good at painting disasters on the wall. We shouldn’t conjure up any.” The location is viewed differently in the USA. “We have seen some large investments in this country, and Germany remains important as a sales market.” Americans have been critical of the tax burden in Germany and, above all, the expensive energy for years.

Bureaucracy is also a huge burden, but it is not just a German issue. “There are also a lot of regulations in other countries, but we have to be much quicker with approvals, for example,” said Menne. In the USA, the bureaucracy is often less initially, but many things are later regulated in court in a lengthy and costly manner. “Some German companies have experienced this painfully,” said Menne. “Not everything is easier in the USA.”