The US-China Trade War: Implications for Germany's Manufacturing Sector
Increased trade conflict between the U.S. and China may result in the loss of approximately 25,000 jobs in Germany.
The ongoing trade war between the United States and China sparks concerns for Germany's economy, potentially costing the country thousands of jobs in the manufacturing sector. According to Allianz Trade, a credit insurer, increasing competition could lead to job losses in manufacturing sectors like mechanical engineering, electronics, and motor vehicles.
A Closer Look at the Impacted Industries
Mechanical Engineering
German mechanical engineering companies could experience intense competition as Chinese goods that would have been exported to the U.S. enter alternative markets. While China's share of the global mechanical engineering market is relatively small, any disruptions in the global supply chain could still affect these firms.
Electronics
The electronics industry could struggle due to tariffs on components imported from China or the United States, potentially leading to shortages, increased costs, or production delays that impact employment stability. Additionally, the sector's reliance on international trade leaves it vulnerable to broader economic disruptions.
Motor Vehicles
With tariffs on vehicles and their components, the auto industry could face higher production costs and reduced demand, potentially impacting job security in this sector. Some companies within the industry might need to reroute supply chains or diversify production locations to counteract the effects of tariffs, which could result in job shifts or retraining needs.
The Broader Economic Landscape
Germany's economy is heavily export-driven, making it susceptible to global trade disturbances like the U.S.-China trade war. Reduced demand for German exports could lead to employment declines in manufacturing sectors. Moreover, the ongoing trade tensions pose a significant risk to Germany's economic recovery, creating uncertainty and potential job losses.
The US President Donald Trump has expressed support for raising tariffs to a level of 80%, but the final decision on this matter lies with his finance minister, Scott Bessent, who has previously advocated for opening the US market to China. The consequences of these shifts would be significant but not entirely bleak. Companies could benefit from lower purchase prices as the influx of Chinese goods brings more affordable intermediate and precursor products, leading to partially higher corporate margins.
Despite the challenges, German companies have shown resilience in the face of competition from China. In fact, strong competition has not significantly impacted the country's overall industrial gross value added, indicating the strength and adaptability of both the manufacturers and the economy as a whole.
Sources: ntv.de, als/AFP
- China
- USA
- Tariffs
- Germany
- Exports
- Given the ongoing trade war between China and the USA, various employments policies across Germany's manufacturing sectors may need to be reconsidered due to the potential job losses in response to heightened competition.
- Moving forward, the finance ministry in the USA, under the leadership of Scott Bessent, will make the final decision on raising tariffs, which could have significant implications for the industry, employment, and finance, particularly in Germany's export-driven economy.
