Business: Bundesbank: Trump’s tariffs considerable risk for Germany

The Bundesbank warns of serious consequences for the German economy if the customs conflict with the USA escalated. A foreclosure course of the USA under Trump would particularly affect the exporting nation Germany and bring considerable risks to economic growth, said Bundesbank President Joachim Nagel in Frankfurt. “Protectionism leads to welfare losses in all affected countries. There are no winners.”

According to economists, new tariffs also have consequences for the German labor market, which has clouded at the beginning of the year. The shortage of skilled workers is less noticeable there because of the economic crisis.

Less growth, higher inflation

Nagel referred to the Bundesbank model calculations, which examined how Trump’s customs threats could affect the election campaign and possible counter -reactions from trading partners.

According to this, German economic output in 2027 could be forecast by almost 1.5 percentage points than before. A devaluation of the euro could strengthen Germany’s competitiveness. But that is not enough to compensate for the negative effects. “Inflation could also be replaced, although the extent is very insecure.” It is a hypothetical scenario, emphasized Nagel.

Trump threatens new steps

In its calculations, the Bundesbank used Trump’s election campaign announcements: for imports from China, tariffs would therefore increase to 60 percent and for products from Germany and other countries to 10 percent. In addition, the Bundesbank took further announced measures such as tax reliefs and a large -scale deportation of immigrants in the United States. In addition, she assumed that trading partners react with retaliatory tariffs – as the EU announced.

So far, the US government has implemented additional tariffs of 10 percent to Chinese goods. Customs of 25 percent to imports of aluminum and steel have been announced for March, tariffs in the same amount of Mexico and Canada are in the room. In addition, Trump has recently signed an arrangement that tariffs are to be raised everywhere where the United States is currently less demanding than its trading partners.

New tariffs under Trump are the greatest risk for the German economy, which has already shrunk for two years in a row. For this year, the federal government and leading economists expect mini growth. The United States is the most important trading partner for Germany. According to economists, an escalating trade conflict could cost thousands of jobs in Germany, especially in industry.

Weak economy dampens a shortage of skilled workers

In any case, the labor market in Germany has recently clouded, and in January the number of unemployed rose vigorously. After all, the weak economy leads to a falling demand for specialists, as a survey by the Munich IFO Institute shows.

As a result, 28.3 percent of the companies recently got too few qualified workers, in October it was almost 32 percent. The shortage of skilled workers is felt a little less, IFO economist said Klaus Wohlrabe.

Institute: 200,000 new jobs about higher armaments expenditure

The tense geopolitical situation could ensure more employment. Up to 200,000 jobs could arise if Germany increased its defense spending from 2 to 3 percent of gross domestic product, according to a study by the Institute for Labor Market and Vocational Research (IAB) with the Federal Institute for Vocational Training and the Society for Economic Structural Research.

For Germany, higher expenses for defense would be a considerable burden, but ultimately portable, says IAB researcher Enzo Weber. If the additional expenses were financed through new debts, an increase in economic output by 1 percent can be expected. The new jobs could arise, among other things, at the Bundeswehr itself, construction or metal production.