Trade conflict with the USA: German companies in crisis!

Trade conflict with the USA: German companies in crisis!

Amid a tense international trading environment, a current investigation into the business situation in Germany sheds light on the impact of recent developments. The survey of German Business Panel shows that the first phase of government since the federal election is characterized by external political tensions, in particular due to the trade conflict with the USA.

The average rating of the economic policy content in the coalition agreement is only 3.6 on a scale from 0 to 10. Particular attention is paid to corporate tax: 39% of companies doubt that the planned reduction from 15 to 10 percent will be implemented by 2032. The uncertainties regarding possible counter-financing and legal agreements increase skepticism.

Impact of the trade conflict

The company bosses report significant challenges. Around 71.2% of those surveyed are directly affected by the trade conflicts, while 61.5% speak of unclear demand developments. These uncertainties have led to investment freezes, price increases and a hiring freeze in many places. Current growth expectations for the next 12 months are just 0.6% and for the next five years at 1.7%.

However, the customs agreement between the EU and the USA, which could defuse a possible trade conflict, does not offer any real relief to many German companies. With the introduction of US import tariffs of 15% on many EU products from August 7, 2025, many companies will have to rely more on the internal market and on markets in Asia and Latin America. A survey by the German Chamber of Commerce and Industry (DIHK) shows that more than 50% of companies expect increasing difficulties - for companies with direct US business the figure is almost 75%.

Criticism and demands from the industry

German industry is reacting with restraint and even horror to the customs agreement. The President of the BGA described the agreement as a “painful compromise” and warned of the negative consequences for retailers and job security. Critics such as the BDI see the high tariffs as a negative signal for the export-oriented industry.

The tariffs on car imports, which have been reduced to 15%, and the additional customs hurdles are having a particularly painful impact on the competitiveness of European companies. The President of the Association of the Automotive Industry, Müller, emphasizes the need for a well-thought-out design of the new agreement. In order to achieve comprehensive improvements, the DIHK is also calling for further negotiations with the USA and a comprehensive trade agreement, including free trade agreements with Mercosur countries.

Economist Jens Südekum warns of continued uncertainty in the customs dispute until the end of the US legislative period. The “Accounting for Transparency” project, which is funded by the DFG, has been running since July 2019 and employs more than 100 scientists from nine universities to analyze the dynamics and challenges in the German economy.

Companies continue to demand a reduction in income tax for small and medium incomes as well as digitalization of financial administration. Although these points are vaguely announced in the coalition agreement for the middle of the legislative period, their implementation remains unclear.