After US and China have used import duties on each or, transatlantic coordinator of federal government, Peter Beyer (CDU), warns against an escalation spiral. “At moment it looks like a global trade war,” said Beyer to newspapers of Funk Media Group.
He is counting on fact that US president Donald Trump will also impose tariffs on auto imports before US parliamentary elections in November. “This would primarily hit German auto industry, which accounts for 50 percent of European exports to US,” said Beyer. However, US economy will also suffer from customs duties. “There is no winner in a trade war.”
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On Thursday, US import duties of 25 per cent were entered into force on imports from China. They have a value of 34 billion dollars. China immediately reacted with its own tariffs on imports from United States to a similar extent. One sees itself forced to “necessary counterattack”, said a spokesman of Department of Commerce in Beijing. The US had started ” biggest trade war in economic history”. US president Donald Trump is threatening China to introduce tariffs on all Chinese imports worth more than 500 billion in coming weeks.
The Chinese Ministry of Commerce also filed an official lawsuit with WTO against United States, following example of EU and Canada. The Government of People’s Republic sees rules of organization violated.
China’s tariffs affect agricultural products from United States such as soybeans, fish, pork, beef and dairy products – products from rural areas that have mostly voted for Trump. However, higher tariffs are also levied on cars. This is especially true for German car manufacturers such as Daimler and BMW, who also supply largest automobile market in China from ir factories in USA.
Daimler warns against losses
Daimler already issued a profit warning. Almost one in five BMW sold in China comes from USA. Beyer assumes that Trump will also impose duties on cars from EU, presumably even before US parliamentary election on 8 November. That would meet before AllemDeutschland. The tariffs now being imposed, according to Chinese data, are aimed at 59 percent on foreign-invested companies in China. US companies in China also criticized tariffs as “counterproductive”.
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Economists also fear that conflict between China and US will grow into an uncontrollable trade war. While International Monetary Fund (IMF) currently considers trade volumes concerned to be too small, this alone could lead to major problems for global economy. However, effects are feared by uncertainty of markets and an ever-increasing spiral of escalation.
Commerzbank sees global production chains at risk
Beyond Verkraftbarer Short-term consequences, “more calamity” threatens in long run, because global production chains of companies could tear, Commerzbank wrote. “Then multinational companies would have to write off parts of ir international production sites and raise domestic production sites at high cost,” y warned. “Revenue slumps and cost-cutting programs would be result, which would also severely impact workers.”
Trump is trying to counter US deficit in foreign trade of more than 800 billion US dollars. He violates WTO rules. He also occupied neighbors Canada and Mexico as well as allies like EU countries with tariffs on steel and aluminium under assurance that he would guarantee national security of his country.
Trump’s approach is a massive criticism not only by US companies in China, but also in Germany. Parts of Trump’s own Republican party see taxes hidden in customs duties. Critics believe that a part of trumps can be neutralized in entrepreneurial spirit of celebrated tax reform.
