Peking's New Sales Markets: US-China Trade War Could Threaten Jobs in Deutschland
Potential job losses of 25,000 in Germany due to US-China trade conflict
The escalating spat between Washington and Peking over their hefty tariffs might shift more goods from China to places like Deutschland, potentially putting jobs on the line. According to analysts, this could imply as many as 25,000 job losses in German manufacturing, a nagging thought that looms for the German economy.
In the event of a stalemate between the duo, China may divert more exports to Germany, as suggested by credit insurer Allianz Trade. The increased competition could spell trouble for an estimated 17,000 to 25,000 jobs in various sectors like mechanical engineering, textiles, electronics, computers, and automotive. Regional hubs such as Upper Franconia, Tubingen, and Freiburg could feel the brunt the most.
The Allianz Trade analysis presumes that Chinese goods worth up to $239 billion could seek alternate marketing channels amid the trade war, with approximately $80 billion potentially filtering into the EU. Out of this, most of the shifts would likely end up in Deutschland, given current trade patterns. Chinese imports to Deutschland could witness an increase of up to $33 billion.
The tariff levels remain uncertain, with US President Donald Trump discussing an 80 percent levy on imports, a decision ultimately left to his finance minister, Scott Bessent. The tit-for-tat strategy could have profound consequences, but the Allianz Trade analysis doesn't paint a completely dismal picture. Lower purchase prices for many intermediate and raw materials could result in higher corporate margins, offering some relief.
German firms have proven to be quite robust, even against stiff competition from China. Despite the competition, industrial gross value added has held up relatively well compared to earlier periods, as explained by Allianz Trade CEO Milo Bogaerts. While the US-China trade war poses challenges, the impact on jobs in Deutschland appears to be minimal and largely indirect, with key players in the economy demonstrating admirable resilience.
Sources: ntv.de, als/AFP
- China
- USA
- Tariffs
- Germany
- Exports
Insights:
- Economic Impact on Germany: The direct impact of the US-China trade war on Deutschland's economy is minimal, with exports expected to fall by under 0.2% and economic output by about 0.2%[1]. This limited impact is due to the global nature of US tariffs, which affect all countries equally, hence not creating a specific disadvantage for Germany or the EU[1].
- Export Orientation: Germany's economy is heavily reliant on exports, accounting for 36.1% of its GDP[3]. This sensitivity to global trade policies, however, does not result in a specific disadvantage for Germany or the EU, as the US tariffs affect all countries equally[1][3].
- German Firms in China: German firms operating in China primarily focus on the local market, adopting an "in China for China" strategy. This strategy helps insulate them from the direct effects of US tariffs, as their operations are not heavily exposed to international trade disruptions[2].
- Impact on Jobs: The trade war could have indirect effects on jobs in Germany, primarily through its impact on global trade volumes and economic growth. A reduction in global trade due to the trade war could lead to slower economic growth, potentially impacting employment in sectors closely linked to international trade[1][3]. However, the stability of German firms operating in China, along with the potential for job creation in the domestic market as a result of increased domestic demand for previously exported products, may offset some of these challenges[1][2].
- The escalating trade conflict between the USA and China, marked by tariffs, might lead to a shift in more goods from China to Germany, potentially causing employment disruptions within various sectors, such as mechanical engineering, textiles, electronics, computers, and automotive.
- The job market in regions like Upper Franconia, Tubingen, and Freiburg could be notably affected by increased competition due to Chinese exports diverted to Germany as a result of the US-China trade war.
- Despite the potential threats to jobs in Germany, the Allianz Trade analysis suggests that the indirect impact on employment might be minimal, as industrial gross value added has held up relatively well compared to earlier periods.
- In the uncertain landscape of tariff levels, lower purchase prices for various intermediate and raw materials could result in higher corporate margins for German firms, offering some relief amidst the ongoing trade dispute between the USA and China.
