A Hitch in Trade: German Businesses Overseas Face Darkening Skies
International Business Tension: German Businesses Overseas Grow Increasingly Pessimistic - Overseas sentiment among German businesses gridlocked amid trade disagreements
In an unwelcome turn of events, German firms operating abroad are grappling with worsening conditions and surging uncertainty, according to the AHK World Business Outlook - a report issued by the Foreign Trade Chamber. There's no sight of recovery in German foreign trade.
Volker Treier, a key figure, pinpoints US trade policy as a major contender, eliciting investor doubts and sowing seeds of discontent. "The result? Investments are stalled or scrapped, established business ties are reevaluated," Treier explains.
Approximately 60% of German companies outside Germany forewarn negative repercussions from US trade policy, compared to 85% in the US. "The protectionist and unpredictable trade policy in the US is causing notable uncertainty and restricting economic activities," Treier cautions.
Apart from tariffs and counter-tariffs, German companies encounter political interference in supply chains and biased competition stemming from subsidies and industrial policies as obstacles. Treier urges German and European Union policymakers to "bolster their local competitiveness and forge new dependable trade relationships worldwide."
The survey, based on feedback from around 4,600 German companies in approximately 90 countries, was conducted between March 17 and April 14.
Beyond the Surface
US-German trade is substantial, with the US being a key trading partner for Germany, accounting for about 10.4% of Germany's total goods exports[1]. In 2023, Germany exported goods worth $157 billion to the US, major segments including cars, vaccines, and packaged medicaments[2]. On the other hand, the US exported $94.8 billion to Germany, primarily cars, crude petroleum, and gas turbines[2].
The recent announcement of US tariffs on European imports poses a considerable risk to Germany's export-reliant economy, as goods exports account for 36.1% of the GDP[1]. The imposition of tariffs by the US has triggered economic insecurity for German companies operating overseas, potentially leading to market volatility and economic instability[1].
Despite the challenges, Germany's exports to the US have grown at an annualized rate of 4.82% over the past five years[2]. This growth demonstrates the tenacity of German firms in the face of trade impediments. Nevertheless, Germany maintains a positive trade balance with the US, which makes it more vulnerable to trade disputes[2].
Navigating the Storm
In the face of adversity, German companies might consider diversifying their export markets to reduce their dependence on a single economy. Investing in technological innovation could also helpThese firms remain competitive in the US market despite trade obstacles. Moreover, engaging in diplomatic efforts to preserve and fortify free trade agreements with the US could help mitigate the impact of tariffs and trade barriers.
- The AHK World Business Outlook, issued by the Foreign Trade Chamber, reveals that German businesses operating overseas are facing increasing uncertainty due to employment policy, with US trade policy being a significant contributor.
- Volker Treier warns that US trade policies are causing notable uncertainty and restricting economic activities, leading to stalled or scrapped investments and reevaluated business ties.
- According to the report, approximately 60% of German companies outside Germany foresee negative repercussions from US trade policy, demonstrating the impact of employment policy on their operations.
- Apart from tariffs and counter-tariffs, German companies face political interference in supply chains and biased competition from subsidies and industrial policies, highlighting the complexity of employment policy challenges.
- Treier urges German and EU policymakers to focus on bolstering local competitiveness and forging new dependable trade relationships worldwide to counteract the effects of US trade policies.
