Uninterrupted appeal of U.S. market remains strong, according to IHK head Susanne Herre
Amidst the ongoing trade tensions between the US and the EU, German companies are finding themselves in a state of concern and uncertainty. The imposition of tariffs by the US on European goods, particularly in the automotive sector, has significantly impacted German exports, leading some companies like BMW and Daimler to consider relocating production to circumvent these tariffs.
However, the broader German economy remains optimistic, with hopes for a resolution in US-EU trade negotiations. The ZEW index of economic sentiment in Germany has reached its highest level since early 2022, reflecting improved investor confidence amidst potential trade agreements. Despite this optimism, the uncertainty surrounding US trade policies continues to affect investment decisions, with some investors increasingly cautious about the US market and shifting their focus to Europe.
The appeal of the US market for German companies lies in its excellent innovation and research conditions, direct access to a significant sales market, and the ability to shorten supply chains to US customers. Many companies are currently waiting and seeing due to the US trade policy under President Trump, but the attractiveness of the US market as an innovative growth market remains unbroken. To attract more US direct investments, Germany needs to maintain its educational level, especially in the field of Artificial Intelligence.
The US offensive in the field of artificial intelligence is seen as a positive example, and many German companies are considering expanding their activities in the USA. For companies that want to supply the US market specifically, local production sites are interesting to avoid long delivery times. Many German companies in the USA attempt to implement dual training models locally to address the weak US labor market, following the successful model from Germany.
Susanne Herre, the CEO of IHK Region Stuttgart, is focused on strengthening the international competitiveness of regional companies. She is also engaged as the chairwoman of the University Council Hohenheim and in the supervisory board of the Guarantee Bank Baden-Württemberg. Herre emphasises the need for Germany to remain internationally competitive through targeted deregulation and the promotion of innovations through an agile environment and reduced bureaucracy.
The migration policy exacerbates the already large shortage of skilled workers, and the high quality standards in Germany, symbolized by "Made in Germany," still enjoy great respect. The zigzag course of tariffs and the concern about counter-reactions, also from the EU, are noticeable in all conversations. Nonetheless, the potential for a trade resolution and the relatively strong performance of the European economy compared to the US could encourage renewed investment interest in the future.
In conclusion, while the current US trade policy presents challenges for German companies, the US market remains an attractive destination for many due to its innovation potential, low energy prices, fast approval procedures, and attractive funding programs at the level of individual states. However, the partly contradictory signals from Washington do not provide a reliable basis for planning, and the sentiment of German companies on site is significantly clouded by the current US trade policy.
- In light of the US market's excellent innovation and research conditions, direct access to a significant sales market, and the ability to shorten supply chains to US customers, many German companies are considering expanding their activities in the United States.
- Amidst renewed investment interest in the future, the potential for a trade resolution between the US and the EU and the relatively stronger performance of the European economy compared to the US, may encourage German companies to reconsider their investment decisions in the US market.
