According to a study by the Cologne Institute of the German Economy, another presidency of Donald Trump could cause billions in economic damage in Germany.
If Trump is re-elected, he has floated tariffs of 60 percent or more on Chinese products as well as flat-rate tariffs of 10 percent on goods imported into the United States. Over the course of a four-year term, this could mean a total loss of more than 120 billion euros for the German economy, write the authors of the published study.
If China retaliates with its own tariff increases on US imports, this value would continue to rise, writes the IW. Such a trade conflict would dampen global trade and exports and private investments would decline in Germany. This would harm Germany and the EU more than the USA. In the more conservative scenario – in which China does not strike back – there would be a 1.2 percent lower gross domestic product for Germany in 2028, compared to a development without these extra tariffs.
As a consequence, the IW experts recommend using the time until another possible Trump presidency for further agreements with the United States on steel and critical raw materials. The threat of countermeasures could also help in an emergency. The EU also needs further free trade agreements, for example with Australia, the South American Mercosur states, Indonesia and India.