Published On: Wed, May 15th, 2019

Germany PANIC: Economy ‘faces BATTERING from Trump’ if US imposes car tariffs | City & Business | Finance

Germany, one of the largest direct car exporters to the US, could see its automotive sector fall as much as 12 percent over “three bad trading days” if the US leader steams ahead with duties on car imports, it has been claimed. As well as this, the German stock market could tumble by as much as six percent. Germany’s gross domestic product (GDP) is currently 47 percent made up of exports, with the European Union being the largest car exporter in the world, meaning any hit to this sector could mark a substantial dent in the economy. President Trump is due to make a decision about the European tariffs which could affect some £41billion worth of exports.

The US leader is considering tariffs of around 25 percent on imported cars and auto parts over fears a trade imbalance is threatening national security.

He faces a May 18 deadline to act on recommendations of a Commerce Department study.

However, several analysts believe the President could postpone his decision to focus on developments in his trade war with China.

Christoph Schon, executive director of Axioma, a risk management solutions provider, told CNBC any tariffs slapped on European car manufacturers would be detrimental to the German economy.

He said any losses could happen over three trading days, or over five to 10 sessions.

There was better news for Germany today as industrial production figures fared better than expected.

The biggest economy of the currency bloc recorded a 0.4 percent hike after two consecutive monthly falls.

Peter Altmaier, Germany’s economy minister, said: “The growth in the first quarter of this year is a sign of light but it’s no reason to sound the all-clear.

“We must do everything we can to swiftly find sustainable solutions which enable free trade.”

But Germany’s first positive month in the year was not enough to offset marked falls of output in France and Italy, resulting in the overall negative reading.

Overall eurozone output in the 19 countries sharing the euro fell by 0.3 percent on the month.

France saw production decline by 1.0 percent in March, while Italy recorded a fall of 0.9 percent in the same month.

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Germany PANIC: Economy ‘faces BATTERING from Trump’ if US imposes car tariffs | City & Business | Finance