Majority of German businesses anticipate increased obligations from the forthcoming US trade agreement
The European Union-United States trade deal, set to take effect this Thursday, has left many German companies with direct U.S. business bracing for potential implications on their competitiveness and profitability.
According to a recent flash survey conducted by the German Chamber of Commerce and Industry (DIHK), approximately 80% of companies with direct U.S. business report their primary concern as the introduction of new tariffs. These tariffs could increase to 15% on most EU exports to the U.S., a rise that could lead to higher costs for German companies exporting to the U.S., potentially eroding their competitive edge in the market.
Critics argue that the agreement disproportionately favors the U.S., leading to concerns that German companies may lose market share due to increased costs. This could impact industries like automotive, chemicals, and metals, which are heavily reliant on U.S. exports.
The deal's details are still being worked out, leaving companies uncertain about specific sectoral tariffs and other trade conditions. This uncertainty can hinder long-term planning and investment decisions.
In response to these concerns, German companies might consider diversifying their export markets beyond the U.S. High-growth economies of Asia, such as China and India, present significant opportunities for expansion. German companies could focus on developing strong trade relationships in these regions to offset potential losses in the U.S. market.
Latin America also offers growing markets with potential for German exports, especially in sectors like automotive and machinery. Strengthening trade within the European Union itself and with neighboring countries like the UK could also provide a buffer against U.S. tariff impacts.
Countries in Southeastern Europe offer another potential market for expansion, particularly in the automotive and manufacturing sectors.
Helena Melnikov, DIHK's chief executive, stated that the trade deal is a "bitter pill to swallow" for many German companies. She urged the EU Commission to push for improvements in further talks with the U.S., citing the need for clarity and certainty in the trade relationship.
Despite these concerns, around 37% of German companies do not foresee any effect from the trade deal. Only 5% of German companies expect economic relief as a result of the trade deal, according to the survey conducted by the German Chamber of Commerce and Industry (DIHK).
As the EU-US trade deal looms, German companies are left navigating a complex landscape of potential costs and opportunities. By exploring alternative markets, they can mitigate the risks associated with the new trade deal and maintain their global competitiveness.
The business landscape for German companies with direct U.S. industry might witness a shift due to the EU-U.S. trade deal, with potential consequences on their finance and profitability, especially if new tariffs are introduced, as 80% of companies reported in a recent survey by the German Chamber of Commerce and Industry (DIHK).
In light of these concerns, diversifying export markets beyond the U.S., such as high-growth economies in Asia or Latin America, could offer opportunities for German companies to offset potential losses and maintain their global competitiveness.
