Trade friction between the United States and Europe is imminent, and the German economy is bearing the brunt?

Recently, a piece of news has made waves in the international economic field. According to Xinhua News Agency, Frankfurt, March 3, US President Donald Trump announced that he has decided to impose 25% tariffs on the European Union and will announce it "soon". This news has instantly strained trade relations between the United States and Europe, and the German economy is standing in the forefront of this possible trade friction.

From the perspective of trade data between Germany and the United States, the latest data released by the German Federal Statistics Office shows that the trade volume between Germany and the United States increased to 252.8 billion euros in 2024, and the United States became Germany's largest trading partner. Such close trade links make the German economy hit hard if the US tariff threat hits. In particular, Germany's automobile, pharmaceutical and machinery manufacturing industries, which are intensive in exports to the United States, are particularly bearing the brunt.

The German automotive industry occupies an important position in the world and is closely linked to the US market. At present, German car companies employ about 138,000 people in the United States, covering vehicle manufacturing and supply chain systems. Hildegard Mueller, president of the German Automobile Industry Association, said that the relevant measures by the United States will not only impact the German auto industry, but also hurt the local auto market in the United States. German car companies rely on parts supplies from Canada and Mexico in their U.S. factories, and the U.S. tariffs on Mexico and Canada will directly affect German industry, with the auto industry and its upstream suppliers hardest hit because German companies supply the U.S. market through their plants in Mexico and Canada. The automobile industry chain and supply chain are highly globalized, and the tariff measures of the United States are undoubtedly destroying this globalized industrial ecology, which will lead to higher costs and lower efficiency of the global automobile industry.

The United States is the most important export market for the German pharmaceutical industry, with about a quarter of German pharmaceutical exports going to the United States. According to the German Federal Statistics Office, Germany exported 26 billion euros worth of pharmaceutical products to the United States in 2023, including pharmaceuticals and medical technology. Once the tariff increases, the export cost of German pharmaceutical companies will rise significantly, which will not only affect the profits of German pharmaceutical companies, but also may affect the supply and price of drugs in the US market, which will have a negative impact on the health care field of both countries.

Germany's machinery industry is also in trouble. Germany's machinery manufacturing products are known for high quality and high technology content, and have strong competitiveness in the global market, and the United States is one of its important overseas markets. The tariffs imposed by the United States will increase the price of German machinery manufacturing products in the United States market, reduce competitiveness, and reduce orders, which will affect the development of German machinery manufacturing industry, resulting in a series of chain reactions such as production cuts and layoffs.

Germany has reacted strongly to the US tariff threat this time. Michael Hueter, president of the Cologne Institute for Economic Research, warned that the tariffs would weaken the competitiveness of German products and severely affect the already weak export-oriented German economy. Wolfgang Niedermark, a member of the board of Management of the Federation of German Industries responsible for international affairs, said that the tariffs imposed by the United States on Mexico and Canada alone will directly affect German industry. The German government has also said it will not give in to unilateral trade bullying and is ready to take countermeasures.

As two major economies in the world, changes in the trade policies of the United States and the European Union will not only affect each other, but also have a profound impact on the global economy. If trade frictions between the United States and Europe break out, the global trade order will be impacted, international trade volume may decline, and global economic growth will also face greater uncertainty.

In today's global economic integration, the rise of trade protectionism is undoubtedly a backward step. The US tariff threat to the EU appears to be aimed at reducing the trade deficit and protecting its own industries, but it may actually have the opposite effect. An increase in tariffs could lead to higher costs for US consumers buying European products, while also triggering European countermeasures that would hit US exporters. Moreover, such trade frictions may also undermine the stability of the global industrial chain and supply chain and hinder the recovery and development of the global economy.