Introduction
Gabriel Felbermayr, a renowned economic expert and director of the Austrian Institute of Economic Research, has warned of a potential collapse of exports by up to 80 percent should there be permanent tariffs of 50 percent on EU goods. This could lead to an “economic catastrophe” for Germany and trigger another recession.
Background and Impacts
- Permanent Tariffs: These would result in a massive collapse of German exports and significantly burden the weak German economy.
- Export Collapse: A reduction in exports by 70 to 80 percent would be extremely harmful to the German economy and its structure.
- Countermeasures: Felbermayr calls for EU counter-tariffs to counteract the US measures and compares this to China’s approach.
Economic Impacts
- Recession: Such a shock could drive the German economy, whose engine is the export industry, into a recession.
- Companies and Investors: The looming 80 percent reduction in exports is a warning signal for export-dependent companies and investors.
- Global Impacts: The trade barriers would also burden the USA itself through a collapse of trade flows.
Strategic Recommendations
Felbermayr recommends that the EU decisively implement counter-tariffs to protect economic interests and apply pressure on the USA, similar to what was done in the case of China.