The Heat of the Trade War: Germany Faces a Potential Job Loss Tsunami
Potential loss of 25,000 German jobs due to US-China trade disagreement's impact on German industry
Let's dive into the economic storm brewing between the US and China and find out how it might hit Germany hard.
The ongoing trade war between Washington and Beijing has set the stage for a potential export reshuffle. With less goods heading towards the US, an increase in Chinese exports to other nations – including Germany – could be on the horizon. According to Allianz Trade, this could have dire consequences for jobs in the Old World.
Up to 25,000 jobs in Germany's manufacturing sector could be at risk due to increased competition, as per the expert analysis. Mechanical engineering, textiles, household goods, sanitary products, electronics, computers, and motor vehicles industries are projected to bear the brunt of these job losses. Want to know more about the specific regions likely to take the brunt? Steer your gaze towards Upper Franconia, Tubingen, and Freiburg.
Economy: Trump's Economic Policy - The World Where Rules Are Optional
According to the Allianz Trade analysis, Chinese goods worth up to $239 billion could seek new sales markets in the US-China trade in light of the current tariff levels. Chinese companies would scramble to place these in other global sales markets, with about a third potentially landing in the EU.
Most of these shifts would likely land on German shores, as per the current import patterns of the German economy. Allianz trade experts predict additional Chinese imports to Germany of up to $33 billion.
Uncertainty Surrounds Tariffs
However, the long-term certainty regarding the tariffs is questionable. Donald Trump, US President, hinted at a potential hike to 80% on Truth Social, but the final call rests with his finance minister, Scott Bessent. Bessent previously demanded that China open its market to US imports, stating that closed markets are obsolete. This could bode well for the country, but critics claim it harks back to isolationism.
Despite the threats to jobs and competition in the German manufacturing sector, the overall picture painted by Allianz is not universally gloomy. Companies could potentially benefit from lower product prices as the influx of cheaper Chinese goods reduces the cost of many intermediate and precursor goods, thereby boosting corporate margins.
German Companies: Built to Endure
Allianz Trade CEO, Milo Bogaerts, contends that despite the gloomy outlook, German companies have proven their resilience. "They are stronger than many believe, and more resilient than the bare production numbers suggest," says Bogaerts. Indeed, strong competition from China is nothing new, and German companies have managed to weather the storm relatively well compared to the past.
Sources: ntv.de, als/AFP
[1] Allianz Trade's analysis also includes a detailed breakdown of the most affected industries and regions, which will not be repeated in full here to preserve readability.
- The increase in Chinese exports to Germany, due to the trade war, may lead to a reevaluation of the community policy, as the influx of Chinese goods could potentially shift employment dynamics in various industries.
- The robustness of the German manufacturing sector, particularly in Upper Franconia, Tubingen, and Freiburg, will be put to the test amidst the potential job losses in industries such as mechanical engineering, electronics, and motor vehicles, caused by increased competition from Chinese imports.
- The ongoing uncertainty regarding tariffs could impact the robustness of the German economy, with the potential hike to 80% on certain goods posing a threat to the employment policy, as companies depend on competitive pricing to remain viable.
- In the midst of the potential job losses and competition, the finance ministry, under Scott Bessent, could play a key role in shaping the economy's future, particularly in relation to China-US trade tariffs and the subsequent impact on employments policies in sectors such as textiles, household goods, sanitary products, and computers.
