US tariff move sparks criticism, concern in Germany

IANS February 3, 2025 167 views

The US tariff announcements have sent shockwaves through German business and political circles, with leaders expressing deep concern about potential economic fallout. Chancellor Scholz emphasized the importance of avoiding trade divisions, while industry experts warn of direct impacts on consumers and global supply chains. German companies, particularly in the automotive sector, are closely monitoring the situation and potential disruptions. The moves could significantly strain international trade relationships and potentially increase prices for American consumers.

"Tariffs have never been a good idea to resolve trade policy conflicts" - Friedrich Merz, CDU Chairman
Berlin, Feb 3: US President Donald Trump's tariff move against Canada, Mexico and China has sparked criticism and concern in Germany.

Key Points

1

Germany warns of global economic disruption from US trade barriers

2

Automotive industry faces significant supply chain challenges

3

German investments in Mexico potentially at risk

4

Consumer costs likely to rise dramatically

On Saturday, Trump ordered to impose a 25 per cent tariff on imports from Mexico and Canada, and a 10 per cent tariff on Chinese goods. He also signalled that the European Union (EU) could be next, citing the bloc's persistent trade surplus with the US.

While reaffirming Germany's commitment to economic ties with the US, German Chancellor Olaf Scholz emphasised that the first priority should be "not to divide up the world with many tariff barriers."

"Tariffs have never been a good idea to resolve trade policy conflicts," Chairman of the German Christian Democratic Union Friedrich Merz said, warning of backlash in the US as rising import costs would fuel inflation and hit American consumers directly, reports Xinhua news agency.

Dirk Jandura, president of the Federation of German Wholesale, Foreign Trade and Services (BGA), described the tariffs as "a clear warning to the EU and Ursula von der Leyen," stressing that neither Germany nor the EU should remain passive.

Trump's move would come at a high cost for Americans, Jandura said, adding, "The losers are always end consumers, who will feel the price increase at the checkout."

German companies are also bracing for the impact, as many supply the US market from Mexico, particularly in the automotive industry.

According to the German newspaper Handelsblatt, Mexico has been Germany's most important investment location in Latin America for years, with total investments exceeding 45 billion US dollars since the 2000s.

Volkswagen Group, which operates one of its largest vehicle factories in Mexico, produces nearly 80 per cent of its North American vehicles in Mexico and Canada. A Volkswagen spokesman voiced concerns about the tariffs' potential economic fallout, warning of negative effects on American consumers and the global auto industry.

According to the credit rating agency S&P, Canada and Mexico produce around 5.3 million passenger cars annually, with approximately 70 per cent destined for the US.

Importers are likely to pass most, if not all, of the price increase to consumers, S&P noted, warning that the additional costs would further strain affordability in the US auto market.

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