Another Donald Trump presidency could have massive consequences for the global economy. This is becoming increasingly worrying for German companies. What would be expected?
A second Trump era could turn everything upside down – including economically. Because for Donald Trump: “America first”. This means: a world trade order that has little to do with transatlantic partnership and everything to do with economic protectionism.
In the event of a Trump presidency, it would be conceivable that punitive tariffs would return for products from the EU. During his last term in office, Trump had already introduced punitive tariffs on washing machines, solar systems and steel and aluminum products from Europe. The Democratic US President Joe Biden has also pursued a protectionist course in economic and trade policy in recent years.
New tariffs would make export business more difficult
In view of a conceivable re-election, Trump repeatedly threatens to impose punitive tariffs on foreign cars, which would be serious for Germany. According to estimates by the Ifo Institute, this would result in economic damage of around five billion euros for Germany alone.
Jürgen Matthes, head of international economic policy at IW Cologne, also sees Trump as a great danger: “Dark clouds would be gathering over transatlantic trade. Trump announced last fall that he would impose a minimum tariff of ten percent on imports from all countries “That would mean a large increase in tariffs for many German companies that export to the USA and would make our exports to the USA much more difficult.”
“A major trade war would be a catastrophe”
This would force many companies to relocate production to the USA, which would further weaken Germany as a location. According to Matthes, such a tariff increase could cause the international trading system to collapse completely because many states would retaliate with higher barriers against US products. “Such a major trade war would be a catastrophe for the export-oriented economy.”
Clemens Fuest, President of the Ifo Institute, sees no strategic advantage for Trump in punitive tariffs: “US companies in this country earn just as much as European companies in the USA. The USA would have no strategic advantage through punitive tariffs.”
Would stock prices go up?
However, Trump is also a factor of uncertainty because he could withdraw from international bodies, such as the World Trade Organization (WTO) or NATO. It would also be conceivable that he would reduce or completely stop support for Ukraine. Fuest also fears that Trump could also end cooperation with other countries on climate protection.
A second presidency under Trump would also have an impact on the financial markets. Martin Lück, head of capital market strategy at Blackrock, expects a positive effect on the stock markets at least in the short term: “The negative consequences that would probably be associated with a re-election will only be noticeable in the prices in the long term.”
Possible Tax cuts
Matthes also expects positive effects on the stock market: “As a Republican, Trump is likely to pursue business-friendly policies and possibly reduce taxes again.” German companies with subsidiaries in the USA could also benefit from this. “Trump’s policies are stimulating the economy in the USA and are likely to have a positive effect on the stock market.”
During Trump’s first term as US President, the American stock index S&P 500 had already increased by around 70 percent despite many fluctuations. In the opinion of investment strategist Lück, this was not solely due to Trump, but rather to the expansionary monetary policy and the strong growth of the global economy.