Trade wars a 2 way street

Trade wars

Watch Germany

Trade wars have begun by Brad Macdonald

When it comes to trade, no nation has more at stake than Germany. Berlin quietly sits at the heart of global trade. It has the fourth largest economy in the world, is the world’s third-biggest exporter, and is the engine that drives Europe economically. As Spiegel Online put it, “No other large economy is more reliant on the free exchange of goods and services, on border-free trade and barrier-free exports, than the German economy” (January 28).

Mr. Trump’s views on trade, according to Spiegel, are a “dangerous cocktail for German industry.” This is not hyperbole. America is the single largest importer of German goods. In 2015, it accounted for almost 10 percent of German exports. (And the UK accounted for 7.5 percent.) “Considering that 46.8 percent of Germany’s GDP comes from exports,” explained Geopolitical Futures, “the importance of the U.S. to Germany’s export machine should not be underestimated” (February 6).

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Even a marginal drop in U.S. demand for German goods—and the drop, in the event of a 35 percent tariff, would surely be more than marginal—would have a massive impact on the German economy.

“It is becoming apparent that Trump’s presidency represents a break in the transatlantic relationship, the kinds of which hasn’t been seen since World War ii,” explained Spiegel.

Some looking at this development see Germany and Europe as innocent victims of Donald Trump and Brexit. Germany’s media are doing a marvelous job at selling this narrative. But Germany isn’t a poor, helpless victim. On the contrary, all the uncertainty and tension is giving Berlin an opportunity to develop new trade relationships, to act more aggressively, especially toward the U.S., and to assume a greater leadership in global trade and commerce.

The international community, in general, dislikes President Trump and his vision for America. One consequence is that many nations—European states especially, but others worldwide—are beginning to look to Germany as the new America! The world is rallying behind Berlin as it stands up to Mr. Trump, and we can expect this trend to continue.

It’s still early, but Germany is already gearing up for a fight.

In January, when asked about Mr. Trump’s threat to put a 35 percent tax on some German imports, Finance Minister Wolfgang Schäuble told German public broadcaster zdf: “I also want to point out that currently, American companies don’t have to tax their gains which they make outside of the U.S. That means that hundreds of billions of untaxed gains, of great American companies, rest in a tax oasis” (Trumpet translation).

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