The Strategist

Why German business is afraid of Donald Trump

07/22/2016 - 15:22

Victory of Donald Trump threatens the most important export markets of Germany, and may result in a trade war with China, according to Deutsche Welle.

Gage Skidmore
Gage Skidmore
Most opinion polls say is that the chair of US president will be taken by Hillary Clinton, not Donald Trump. However, sociologists predicted victory of EU supporters before the referendum, too, and we all know the results. The decision to Brexit shocked the German business community. And now, they fear that this November may shock then once again: Trump’s victory is looming on the horizon.

German economic and political elite is strictly opposed to the official Republican candidate for US president. This, in particular, can be seen in a survey conducted by Allensbahskim Institute of Public Opinion Research among major companies and Heads of Federal and Land ministries and Departments. 76 percent of them believe that the German-American relations would suffer if Donald Trump gets elected.

"Trump’s plans on the economic policy can significantly cool the market situation in the United States", - says economist of BayernLB bank Christiane von Berg. This would be a serious blow to German business. First, because the US economy is the world's biggest, and largely determines growth rate of the world economy.

Secondly, the United States were the most important foreign market for the export-oriented German economy in 2015. Last year, German companies sold products to 114 billion euros. In turn, the American volume of trade in the German market was more than 59 billion euros, which made the country the fourth largest foreign supplier after China, Denmark and France. 

Most German businesses are now concerned with Trump’s cross-cutting pre-election speeches on populist, isolationist and protectionist ideas. Reinhold Festge, President of the Association of German Engineering and industrial equipment manufacturers VDMA, says: "Strengthening of protectionism in the United States is the last thing we need in the German-American economic relations." The entrepreneur is especially concerned about fate of Transatlantic Trade and Investment Partnership (TTIP), which seems very interesting for the German business.

Apparently, President Obama will not be in time to sign the agreement, negotiations on which are going quite slow. Businesses in Germany fear that Donald Trump as Head of the White House could put an end to the project of creating the world's largest free trade area between the European Union and the United States - to delight of all TTIP’s enemies in Germany, many of whom are extreme right and extreme left.

However, German exporters are concerned not only with fate of the trade relations between Europe and America. In his speeches, Donald Trump has repeatedly stated his intention to somehow close the US market for Chinese products. This it is fraught with large-scale trade war between the US and China, from which Germany will surely suffer, too. The reason is simple - China is a very important trading partner and the fifth largest export market for Germany.

However, now the German businessmen are consoling themselves that Hillary Clinton would win. Or, perhaps, Donald Trump, if he did become the US president, would become more pragmatic and rational thinking politician than expected from his campaign speeches. "US presidential Donald Trump, who in fact is a businessman, too, is interested in a stable economic and political relations with the most powerful economy in Europe" - says Head of the Federal association of medium-sized businesses Mario Ohofen.

Experts add that separation of powers in the US, which requires President to align many decisions and projects with the Congress, just would not allow the billionaire populist realize his most odious proposals. "The political reality limits the risk", - says Christian von Berg. 


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