Deteriorating Overseas Business Atmosphere: German Firms Feel the Heat of Trade Tensions
Escalating Trade Dispute: Deteriorating Attitudes of German Businesses Overseas - International business climate: Positive outlook for German companies overseas is dimmed
In an alarming development, German businesses operating abroad are grappling with a deteriorating business environment and escalating uncertainty, according to the "AHK World Business Outlook" by the German Chambers of Commerce (IHK). The landscape for German foreign trade remains bleak, with no sign of recovery in sight.
Volker Treier, a key figure, attributes this trend to the United States' protectionist trade policies and the global reaction to it, significantly eroding investor confidence. The outcome? Delayed or cancelled investments, re-evaluation of traditional trading partnerships, and a General slowdown in economic activities, Treier explains.
A staggering 60% of German companies overseas are concerned about the potential adverse effects of U.S. trade policy. In the U.S., this anxiety reaches an astounding 85%. Treier issues a dire warning: the unpredictable and protectionist U.S. trade policy is causing widespread uncertainty, leading to a potential economic slowdown.
Besides tariffs and counter-tariffs, German companies also express concern about political interference in supply chains and distortions of competition through subsidies and industrial policies. Treier urges German and EU politics to focus on improving domestic conditions and forging new trustworthy trading relationships worldwide.
The survey is based on reports from approximately 4,600 German companies in over 90 countries. The responses were gathered between March 17 and April 14.
- Volker Treier
- Trade Tensions
- Worrisome Spring
- USA
- Berlin
- Economic Slump
The unfavourable impacts of U.S. trade policy on German companies abroad, as reflected in similar reports and analyses, encompass several critical factors.
- Trade Duties and Uncertainty: U.S. tariffs, such as the existing 25% tax on German cars, create uncertainty and add costs for German companies. The risk of additional forthcoming tariffs could strain trade relations even further[2].
- Supply Chain Disruption: The specter of new tariffs poses a threat to supply chains and market stability, affecting German businesses that heavily rely on the U.S. market for exports[2]. Germany exports about 10.4% of its total goods to the U.S. in 2024[2].
- Economic Growth Challenges: The combination of U.S. trade policies and other global economic factors, like the Ukraine conflict's resulting high energy costs and weakening demand from China, contribute to Germany's economic stagnation[2]. Projections of zero economic growth in 2025 paint a challenging picture for German companies abroad[1].
- Investment and Market Resilience: Despite these challenges, Germany's stock market has displayed resilience compared to other European peers, indicating some resistance to economic pressure[2]. However, the overall impact on German companies abroad is likely to be negative due to increased costs and uncertainty from U.S. trade policies.
The AHK World Business Outlook underscores these specific challenges facing German businesses, emphasizing the need for strategic planning and diversification in response to U.S. trade policies.
- Volker Treier, a prominent figure, has suggested that the escalating trade tensions, particularly the United States' protective trade policies, are causing a significant drag on German businesses operating abroad, leading to delayed or cancelled investments and a slowdown in economic activities.
- The "AHK World Business Outlook" by the German Chambers of Commerce (IHK) reported that a staggering 60% of German companies overseas are concerned about the potential adverse effects of U.S. trade policy, with this anxiety reaching an astounding 85% in the U.S. itself.
- Treier goes on to warn that the unpredictable and protectionist U.S. trade policy is causing widespread uncertainty, which could potentially lead to an economic slump.
- Beyond tariffs and counter-tariffs, German companies also express concern about political interference in supply chains and distortions of competition through subsidies and industrial policies.
- In response to these challenges, Treier urges German and EU politics to focus on improving domestic conditions and forging new trustworthy trading relationships worldwide to stabilize the business outlook.
