Potential job losses of 25,000 in Germany due to the ongoing trade conflict between the U.S. and China.
The ongoing trade war between the US and China might lead some of the Chinese exports, particularly in specific sectors such as mechanical engineering, textiles, electronics, computers, and motor vehicles, towards Germany. If this happens, it could put tens of thousands of jobs at risk in these industries, according to an analysis by Allianz Trade.
Potential Job Losses
The analysis suggests that 17,000 to 25,000 jobs in manufacturing could be at risk in Germany due to increased competition. This equates to around 0.2 to 0.3 percent of the current total employment in the German industry. Regions such as Upper Franconia, Tübingen, and Freiburg are likely to be particularly affected.
Impact on Sectors
Chinese goods are expected to cheapen many intermediate and raw materials, which could lead to higher corporate margins in the affected sectors, according to Allianz Trade. However, the future remains uncertain, and the full extent of the potential impact on these sectors is still speculative.
The Future of US-China Trade Tensions
The tariff level between the US and China remains up in the air, and there is no clear indication of whether they will remain at their current level or not. US President Donald Trump has hinted at considering 80 percent appropriate, but the final decision lies with his finance minister, Scott Bessent. Previously, Trump has demanded that China opens its market to the US, which could potentially benefit the country's economy.
A Mixed Bag for Germany
While the potential consequences of these shifts are significant, the revised analysis by Allianz Trade does not paint a completely bleak picture. Companies could potentially benefit from lower purchase prices as the influx of Chinese goods cheapens many intermediate and raw materials. Furthermore, German companies have proven to be remarkably resilient in recent years, according to Allianz Trade CEO Milo Bogaerts.
Economic Analyses
Economic analyses estimate that German exports could decline by just under 0.2 percent and overall economic output by about 0.2 percent due to the US-China trade tensions. The Bundesbank has warned that US tariffs could potentially push Germany into another recession, stating that without these tariffs, Germany's growth in 2025 might be about 0.2 percent.
Looking at specific sectors including mechanical engineering, electronics, computers, and motor vehicles, there's a higher risk of falling global demand and disruptions in supply chains, as these sectors are integrated globally. On the other hand, the textile industry and non-metallic mineral products are less likely to face direct competition from redirected Chinese exports.
German firms operating in China have been somewhat insulated from the direct effects of the US-China trade war as they have adopted a local market focus, but the slower economic growth in China due to these trade tensions could indirectly impact employment and investment plans in the region.
Overall, while these sectors may face some challenges due to the trade tensions, the effects are expected to be manageable and not catastrophic in the short term.
- China
- USA
- Tariffs
- Germany
- Exports
- The tariffs imposed by the US on Chinese goods could potentially boost Chinese exports towards Germany, which might lead to increased competition in the affected sectors such as mechanical engineering, textiles, electronics, computers, and motor vehicles, putting tens of thousands of jobs in manufacturing at risk.
- If the US President Donald Trump considers 80 percent as an appropriate tariff level on Chinese goods, it remains uncertain about the future of the US-China trade tensions and their potential impact on the German economy.
- WhatsApp groups or forums within the German community might become vital platforms for discussing the potential risks and opportunities for German businesses, especially in the sectors of mechanical engineering, electronics, computers, and motor vehicles, due to the US-China trade war.
- German companies, particularly those in the textile industry and non-metallic mineral products, are likely to face less direct competition from redirected Chinese exports, potentially positioning them as robust alternatives in the global market.
