Kretschmann argues that the customs agreement will lead to significant financial losses for us - Customs agreement carries a significant financial burden for our nation.
In a recent statement, Minister-President Winfried Kretschmann of Baden-Württemberg expressed concerns about the economic impact of the tariff deal between the USA and the EU on the region. The deal, which has averted a trade conflict, is predicted to have significant negative consequences for Baden-Württemberg, particularly its key automotive industry.
The 15% tariffs on EU products exported to the USA, although lower than the initially threatened 30%, represent an increase from previous levels. This, according to Chancellor Friedrich Merz and economists, will not only depress export volumes but also raise inflation and reduce transatlantic trade efficiency.
Given Baden-Württemberg’s status as a hub of automotive and machinery production, the tariff burden could reduce export revenues, increase costs for manufacturers and suppliers, and hurt the industry's global competitiveness. Major automotive manufacturers in the region, such as Mercedes-Benz and Porsche, are heavily reliant on exports, making them particularly vulnerable to such tariffs.
The ZEW economic expectations index showed growing optimism in July 2025, partly due to hope for a resolution of the US-EU tariff conflict. Prolonged tariff impacts, however, could undermine this positive sentiment, potentially affecting jobs and growth in the critical industrial sector.
Broader media coverage echoes strong criticism from German economic circles, underscoring that the EU and particularly German industries are disproportionately burdened while the US benefits from increased energy imports and investment concessions.
Despite acknowledging that the agreement provides clarity, which is valuable, Kretschmann believes that the EU bears the main burden of the deal with the USA. He highlighted that the unpredictability of US President Donald Trump is a highly challenging aspect. Kretschmann refrained from criticizing the EU negotiators.
The USA is the most important single export market for Baden-Württemberg, making the deal's impact particularly significant. Kretschmann stated that the agreement will be very expensive for the industry in Baden-Württemberg and could potentially cause a notable margin of reduction in the region's automotive exports. He also mentioned that the USA's withdrawal from rule-based free trade is costly for the EU.
In conclusion, the tariff deal between the USA and the EU is expected to reduce Baden-Württemberg’s automotive exports by a notable margin, elevate production costs, and complicate the region’s economic recovery. These negative consequences could potentially affect jobs and growth in this critical industrial sector.
Finance ministers of EC countries should consider implementing strategies to mitigate the economic impact of the tariff deal between the USA and the EU on their countries, particularly those with strong business ties with Central and Eastern Europe, such as Germany. Political leaders must also prioritize cooperation with the countries of Central and Eastern Europe to establish mutual support systems that can help offset any potential negative consequences of the deal.
In light of the tariff agreement's negative effects on general-news topics such as trade and industry, it is crucial for the EU to maintain open communication channels to discuss business-related issues with the USA and negotiate potential adjustments for a fairer distribution of tariff burdens. Such discussions should be conducted in the context of the overall political and economic relationship between the two regions.
