The Danger of High Tariffs for Germany
Economist Gabriel Felbermayr warns urgently of the serious consequences of permanent tariffs of 50 percent on EU goods for Germany. He describes such a measure as an “economic catastrophe” that could lead to a massive and long-term collapse of German exports by 70 to 80 percent.
Devastating Effects on the German Economy
Felbermayr, director of the Austrian Institute of Economic Research, emphasizes that such a tariff shock could plunge the already weak German economy into another recession. The effects would not be limited to exports but would also affect imports, thus exacerbating the overall economic situation.
Calls for EU Countermeasures
To avert the impending economic damage, Felbermayr urges the European Union to threaten counter-tariffs and to implement them if necessary. He points to China, where a similar strategy led to a shift in the U.S. stance after a brief escalation phase. The level of 50 percent tariffs is extraordinarily high and would also cause significant damage in the U.S. itself.
Serious Risks for the German Economy
Studies on the tariff conflict with the U.S. show a strong decline in German exports and a minimal drop in GDP even at lower tariff rates. These figures highlight the risk of an escalating trade war for key industries such as pharmaceuticals, automotive, and machinery.
- Permanently high tariffs of 50% on EU goods could reduce Germany’s exports by up to 80%.
- This would have catastrophic consequences for the German economy, including a possible recession.
- The EU should respond with countermeasures and be prepared to enforce them.
- Even if exchange rate effects are encountered, the damage remains substantial.
- Such high tariffs would be unusually high and would harm U.S. companies as well.
These warnings underscore the enormous risk of an escalating tariff conflict for Germany as an export-oriented economy.