Germany: ‘Eutgol’ Will Trump Put Duty on China · Global Voices

More damage will be suffered by commercial war with it, according to what German economists estimate. According to a press release issued by the economic institute Ifo of Germany Donald Trump’s new tariffs on imports from Canada, Mexico and China could reduce exports from the US by 22%. Canada and Mexico will also be massively affected. If countermeasures are taken in US customs, Canada should expect a 28% reduction in its total exports and Mexico by 35%. “While China can more easily divert trade away from the US, Canada and Mexico are much more closely connected to the US due to their geographical location,” says Lisandra Flach, director of the Ifo International Economics Centre. The impact would be smaller for China (reduction 3.8%). Germany’s total exports will increase slightly as a result of US duties (increase 0.5%). ‘The effect on German exports is two-sided: On the one hand, US tariffs would reduce demand for German products in the economies of Canada and Mexico. On the other hand, German exports to the US would displace Canadian, Mexican or Chinese exports. However, due to Trump’s threats to impose duties on American imports from the EU in the near future, the chances of such an increase in exports appear to be very small,” says Flach. In the medium term, Canada should expect a 14% reduction in industrial value added. In Mexico, it will decrease by 13%. In China it would only be a little under 1%. This results from calculations by the Ifo Institute, taking into account the countermeasures taken by the affected countries in response to the American duties. CORVERSE Without countermeasures to US tariffs, the drop in industrial value added in Canada would be slightly higher (15%). In Mexico, industrial value added would decrease slightly below 10%. The reduction in total exports would also be somewhat lower without countermeasures: 17% for Canada, 21% for Mexico and 14% for the USA itself. Without countermeasures, the decrease in exports for China would be 2.7%. Germany’s exports would increase slightly, by 0.2%. The impact of US duties on Canada, Mexico and China was analysed using the commercial ifo model based on two scenarios: In the first scenario, 25% duties are imposed on Mexican and Canadian products, with the exception of energy-related sectors from Canada, subject only to 10% duties. In addition, Chinese products are subject to 10% duty. The second scenario (‘the dollar-to-dollar scenario’) examines a situation in which Mexico, Canada and China respond in countermeasures.