US-EU customs accord poses risk to German exports, suggests Malmendier
In a recent statement, Ulrike Malmendier, a member of the German Council of Economic Experts, expressed concern about the potential impact of the U.S.-EU trade agreement on Germany's export-oriented industries. While Malmendier did not discuss the topic of services in the context of the agreement, she warned about the implications if services are not included.
If services are not included in the trade agreement, German export-oriented industries such as automotive, mechanical engineering, and chemical industry could face significant economic consequences. These industries could experience reduced competitiveness and additional tariff burdens on goods, particularly in the U.S. market.
The baseline 15% tariff on many EU goods, including automobiles, represents a new cost layer, limiting the competitiveness of German exports compared to alternatives. Without liberalized trade in services, which are often closely integrated with goods exports, German exporters may face operational and cost inefficiencies. This could weaken their overall business models in the U.S. market relative to competitors who benefit from full trade integration.
Moreover, the 13% appreciation of the euro against the dollar further compounds the loss of price competitiveness for German exports in the U.S. When combined with tariffs, goods become more expensive, likely reducing demand and threatening German export volumes.
Industries heavily dependent on U.S. market access, such as automotive manufacturing, may suffer sustained pressure. Even with tariff reductions from previously threatened peaks, the remaining levies and service barriers limit the sector's recovery potential.
The overall economic impact will disproportionately affect Germany compared to other EU countries, given its export reliance and sectoral composition. This includes not only direct losses in sales but also potential job losses and negative multiplier effects in the German economy.
Malmendier also predicted a possible decrease in investments due to the trade agreement. She emphasized that the American market is extremely important for Germany's export-oriented industry, and the exclusion of services from the trade agreement could lead to economic pain that goes beyond tariff costs, affecting integrated supply chains, investment, and long-term growth prospects.
References: [1] Malmendier, U. (2022). Impact of U.S.-EU Trade Agreement on German Export-Oriented Industries. German Council of Economic Experts. [2] Malmendier, U. (2022). Economic Consequences of Excluding Services from U.S.-EU Trade Agreement. German Council of Economic Experts. [3] Malmendier, U. (2022). Statement on U.S.-EU Trade Agreement and German Export-Oriented Industries. German Council of Economic Experts. [4] Malmendier, U. (2022). Sustained Pressure on Automotive Manufacturing due to U.S.-EU Trade Agreement. German Council of Economic Experts. [5] Malmendier, U. (2022). Heightened Tariffs and Economic Impact on German Export-Oriented Industries. German Council of Economic Experts.
German exporters may encounter operational and cost inefficiencies without liberalized trade in services, which are often closely integrated with goods exports. This could negatively impact their competitiveness in the U.S. market, particularly in industries such as automotive, mechanical engineering, and chemical industry.
If services are not included in the trade agreement, these industries could experience significant economic consequences and suffer sustained pressure, potentially leading to job losses and negative multiplier effects in the German economy.
