Well, Then He Shouldn’t Announce Tariffs, Right?

German auto sector could drop as much as 12% if Trump announces tariffs, analyst says.

Tariffs

Gee, I wonder if there is anything the Germans/Europeans could do to prevent that from happening? I dunno. How about like maybe lowering their tariffs? Just thinking out loud here, people.

Germany’s automotive sector could fall as much as 12% over “three bad trading days,” if President Donald Trump imposes tariffs on European car manufacturers, one analyst told CNBC.

Trump has until Friday midnight (Washington time) to decide whether to impose duties on car imports. This would likely hurt Germany, the EU’s traditional growth engine, given that it is one of the largest direct car exporters to the U.S.

“If indeed we get U.S. car tariffs on imports from the euro zone — not just their announcement, you could forget our economic forecasts completely. No chance of a sustained pick-up in activity throughout the second half as we expect.”

Advertisements

German Of The Day: Handelskrieg

That means trade war.

Handelskrieg

A trade war between the United States and Europe is coming and the fallout could tip Germany into recession, according to analysts at German lender Commerzbank…

Official German statistics supplemented by the bank’s own research show that in 2018, the United States was the top export destination for German cars, accounting for about 12% of the total with a value of 27 billion euros of parts or finished vehicles.

The bank estimated that a Trump-ordered tariff increase of 25 percentage points on EU auto imports would slash that figure for Germany down to around 14 billion euros per annum.

When factoring in how much of that export figure is actual German “added value,” the bank estimated that total economic output for the country could fall by around 0.25 percentage points.

“All the more dangerous in a situation where the German economy is only just managing to avoid a recession,” it read.

Political Paralysis?

That’s my thing now. That’s what I do.

Merkel

On the one hand, I could screw it up with this side. On the other hand, I could screw this up over here first. Decisions, decisions…

The global order that underpins German prosperity is unraveling, and Angela Merkel doesn’t know what to do. President Donald Trump’s America First policy is forcing Germany to make an impossible choice between the U.S. and China — pitting the force behind the country’s modern economic success against the key to its future growth…

For decades, the country profited from an international trading system run by the West and backed up by the military might of the U.S. The government just got out of the way and watched exports roll. Those days are over…

“Germany is caught up in a dilemma of changing trade patterns and doesn’t know how to react.”

Trump hin oder her – die USA bleiben Deutschlands wichtigster Absatzmarkt.

Are You Feeling The Security Risk Yet?

European automobile tariff regulators?

Import

The U.S. Commerce Department is set to meet a Sunday deadline to deliver its recommendations to President Donald Trump on whether imported vehicles and parts pose a national security risk, and to outline options on how to address the issue, officials said on Thursday.

Trump would then have 90 days after Commerce’s recommendation to decide whether to impose tariffs…

Trump has urged the EU to drop its 10 percent tariff on imported vehicles. The U.S. passenger car tariff is 2.5 percent, while it imposes 25 percent tariffs on pickup trucks.

The Alliance of Automobile Manufacturers, whose members include General Motors, Volkswagen AG, Toyota Motor Corp, has warned tariffs would boost imported car prices nearly $6,000 on average.

Deutsche Autobauer verstehen die Welt nicht mehr.

Trump Still Really Evil But…

German Carmakers Jump on Potential U.S.-China Tariff Truce. This is how Germany works, folks.

BMW

BMW AG rallied the most in more than three years after U.S. President Donald Trump said China had agreed to remove painful tariffs on imported American-made cars shipped to the world’s biggest automotive market. Daimler AG and Volkswagen AG also rose sharply.

BMW and Daimler, which export sport utility vehicles from U.S. plants to China, stand to be the biggest gainers from a potential reduction of tariffs. Six of the ten best-selling U.S. auto imports to China are made by the two German luxury auto manufacturers.

Autobosse treffen Trump Kurse von BMW, VW und Daimler schnellen in die Höhe.

Robust Export Growth?

German exports rebounded in May, providing more evidence of a strengthening of the economy in the second quarter.

Export

Yeah, I guess that’s true. If you forget the exports last month to one particular country. Those have dropped 10% for some inexplicable reason. But I’m sure that will pick up again real soon, right?

Despite ongoing trade tensions, German exports did what they normally do: grow. In May exports increased by 1.8% MoM, from -0.3% in April. At the same time, imports increased by 0.7% MoM, from 2.6% MoM in April. As a result, the trade surplus narrowed somewhat, from EUR20.1bn to EUR19.7bn.

“Die Verunsicherung durch die Einführung von Importzöllen seitens der USA und die Gegenmaßnahmen der EU und Chinas machen sich direkt bei den Unternehmen bemerkbar.”

When Had We Left The Jungle?

I wasn’t aware that we had.

Jungle

WTO Faces Existential Threat in Times of Trump -U.S. President Donald Trump has set his sights squarely on the World Trade Organization in Geneva. Even its critics are worried that without the organization, the world of trade would revert to the law of the jungle.

The U.S. and other industrialized nations made several concessions to developing economies when the WTO was founded in 1995 and significantly reduced their tariffs. In return, they were able to push through stronger protections for intellectual property. They hoped that the strategy would help slow China’s rise.

But from the U.S. perspective, the system has not been beneficial. And once China joined the WTO in 2001, that dissatisfaction only grew, partly because the Chinese proved adept at taking advantage of the rules. Even today, there is significant dissent within the WTO because the economic superpower China is still classified as a “developing nation” by the organization, which gives it certain privileges. On the other hand, China is fighting for recognition as a market economy, to which both the U.S. and the European Union are opposed because it would mean they could no longer defend themselves against state-subsidized Chinese exports with anti-dumping duties.

On top of all that, the WTO is facing a more fundamental problem: its size and its sluggishness. Negotiating rounds focused on removing tariffs have become increasingly complex. And because everything is up for negotiation at the same time, every member state can paralyze the process by simply exercising its veto. The Doha Round, launched in 2001, is a perfect example: It never achieved any results and has become symbolic of the WTO’s failure.

“The problems are coming from the behavior of a single country that would like to return to the jungle.”

War Is Over! (f You Want It)

What? That was it? No more trade war hysteria? Just when it was starting to get interesting? What Luschen (duds).

EU

The Wall Street Journal reported that Richard Grenell, the U.S. ambassador to Germany, has been in talks recently with the chief executives of German car makers BMW, Volkswagen and Daimler, where they pitched the idea of ending car tariffs between the U.S. and the EU.

During these talks, the executives said they would be in favor of scrapping these levies as part of a broader deal encompassing industrial goods, the Journal said.

“Germany has the right approach to resolving this trade disagreement among friends.”

German Of The Day: Geschröpft

That means fleeced. Or clobbered, if you prefer.

Trump

As in… We protect Europe (which is good) at great financial loss, and then get unfairly clobbered on trade.

„Deutschland zahlt ein Prozent des Bruttoinlandsproduktes (langsam) in Richtung Nato, während wir vier Prozent von einer weit größeren Bruttoinlandsprodukt zahlen. Glaubt irgendjemand, dass das Sinn macht?“

Germany Preparing Itself To Lose The Next “Illegal” War

A Vicious Cycle – Berlin Worried about Losing Trump’s Trade War.

War

The U.S. has followed through with its threat to impose punitive tariffs on European steel and aluminum and the signs are pointing to a global trade war. The German government is doing what it can to prevent harm to its automobile industry.

… The German automotive industry would also be hard hit by a possible trade war with the U.S., where the most cars are sold in the world after China. German carmakers export around a half-million vehicles to the U.S. each year — particularly the kinds of expensive sedans that have been a thorn in Trump’s side for decades. If punitive tariffs are imposed, carmakers would likely have no choice but to react with higher prices and thus risk a decline in sales. VW subsidiary Porsche is especially at risk. Although the company sells almost a quarter of its vehicles in the country, it does not operate any factories of its own in the U.S.

“Germany stands to lose most.”