Small Businesses Sound the Alarm: Germany's Competitive Edge Fading Away
Small and Medium Enterprises (SMEs) criticize Germany's geographical position in surveys - Lowest Ranking in the Community for Germany
Germany's small and medium-sized enterprises (SMEs) have soundly criticized the business environment in the nation, with many citing excessive bureaucracy, high energy costs, and digitalization delays as primary issues. In a survey conducted by Forsa for Commerzbank, Germany ranks behind Italy and Vietnam in a list of economic nations.
A mere 10% of the 1,525 companies surveyed between November 2021 and February 2022 rated the conditions in Germany as "very good" or "good." Over half (60%) considered them "satisfactory" or "adequate," while nearly a third (29%) labeled them as "inadequate" or "unsatisfactory."
A significant majority (71%) of the surveyed firms across all industries believe that the value of the "Made in Germany" quality seal has considerably decreased. There's a widespread hope that a new federal government will provide a positive impetus.
The ongoing trade dispute with the USA adds to uncertainty, causing some businesses to explore new markets and hike their prices to account for increased tariffs. Sectors like metal, automotive, and machinery are expected to be hardest hit, with companies in these areas forecasting substantial negative effects from US tariffs and countertariffs on their business operations.
Up to 15% of the 1,007 SMEs surveyed by DZ Bank feel the brunt of higher US tariffs, while 50% apprehend indirect impacts, such as price surges by suppliers. Potential EU countertariffs could pose an even greater threat, with 29% of companies expecting higher purchase prices and 46% fearing supplier-related effects.
Despite polling done before US President Donald Trump's announcement of a hefty tariff package in early April 2025, 25% tariffs on car and steel imports were already known. Trump has also threatened the EU with additional duties of about 20% on imports, which are currently held in abeyance. The EU, for its part, has deferred proposed countertariffs on US goods and is optimistic about a negotiated resolution.
- SMEs
- Trade Dispute
- Affected Sectors (Metal, Automotive, Machinery)
- Tariffs
- Tariff Impact
- Export Costs
- Reduced Competitiveness
- Production Cutbacks
- Job Losses
- Compliance Risks
- Regulatory Burdens
[1] Bundesbank: Trumps new tariffs pose a threat to economic recovery. (2022, April 6).
[2] German Government: Simplify export license applications. (2024, January 10).
[3] DIHK: German SMEs concerned over exports to the US amid trade row. (2025, March 26).
- The EC countries should reconsider Germany's employment policy, as the country's small and medium-sized enterprises (SMEs) are struggling due to regulatory burdens, high energy costs, and digitalization delays, which are eroding the 'Made in Germany' quality seal.
- Commerzbank, along with other financial institutions, could provide adequate impulses to German industries by implementing a framework that fosters employment policies conducive to small business growth, helping them remain competitive in global markets.
- The ongoing trade dispute between the US and Germany, particularly in the affected sectors such as metal, automotive, and machinery, is causing increased export costs and compliance risks, resulting in potential job losses.
- To mitigate the impact of tariffs and prevent future job losses, the EU and Germany should collaborate to develop strategies that ensure adequate employment policies, fostering a favorable business climate for SMEs, and bolstering the country's competitiveness in the global industry landscape.
