US-China Trade War Might Jeopardize 25,000 German Jobs
Potential job losses of 25,000 in Germany due to US-China trade conflict
Let's break down the economic impacts of the ongoing US-China trade war on our neighbor, Germany. With Washington and Beijing at loggerheads over tariffs, China might redirect some goods towards Germany, potentially putting a significant number of jobs at risk.
According to the analysis by credit insurer Allianz Trade, if the current tariff level remains, Chinese goods worth up to $239 billion could seek new sales markets each year, with around a third, or up to $80 billion, likely headed towards the EU. Most of these shifts would end up in Germany, given the country's import patterns. The Allianz trade experts project an increase of Chinese imports to Germany of up to $33 billion.
This influx could put a strain on the German economy, particularly industries like mechanical engineering, the textile industry, non-metallic mineral products, electronics, computers, and motor vehicles. Regions like Upper Franconia, Tubingen, and Freiburg might be particularly affected.
Allianz economist Jasmin Groeschl explains that this could result in the loss of 17,000 to 25,000 jobs in the manufacturing sector. However, it's important to note that this represents around 0.2 to 0.3% of the current total employment in the German industry.
The Ebb and Flow of US-China Trade
The future of these tariffs is uncertain. US President Donald Trump hinted that he believes 80% is an appropriate level, but the final decision rests with his finance minister, Scott Bessent. Previously, Trump demanded that China open its market to the US, which he believes would be beneficial for the country. However, critics accuse him of isolationism.
Nevertheless, companies could potentially benefit from lower purchase prices due to the influx of cheaper Chinese goods. This could lead to higher corporate margins.
German companies have shown surprising resilience in the face of stiff competition in recent years, according to Allianz Trade CEO Milo Bogaerts. Strong competition from China hasn't decimated industrial gross value added as much as one might expect, he said.
In the context of the US-China trade war, the potential influx of Chinese goods into Germany could be influenced by adjustments in China's employment and community policies to accommodate the redirection of goods. Simultaneously, the finance sector and German businesses are closely monitoring the situation, as the economic impacts of this shift could potentially affect corporate margins and the overall German economy, particularly in sectors like mechanical engineering, textiles, non-metallic mineral products, electronics, computers, and motor vehicles.
