Ifo Institute: New US import duties on cars could reduce German car exports to the USA by 50% in the long term


This is the press release from the German think tank Ifo Institute:

German car exports to the USA could fall by almost 50 percent in the long term if the USA were to impose permanent import duties of an additional 25 percent. This is the result of the latest calculations by the Ifo Institute. "These tariffs would reduce total car exports from Germany by 7.7 percent, equivalent to 18.4 billion euros," says Gabriel Felbermayr, director of the Ifo Center for International Economics. Exports from other sectors and to other countries could slightly cushion the overall economic loss, so that total German exports would fall only by 11.6 billion euros.

The value added of the automotive industry in Germany would fall by 7 billion euros, which would be a reduction of around five percent. The value added in the US car industry, on the other hand, would increase by around 25 billion Euro. The car exports of other countries would also be considerably affected by US customs duties; Mexico, Japan, Canada, Korea, and China should be mentioned in particular. Mexico and Canada could be exempted if their new agreement with the US came into force in time. In the EU, about 60 percent of the damage is attributable to Germany alone.

Felbermayr adds: "The EU can, however, develop a clever counterstrategy that would bring the effects of US tariffs on the economic performance of both sides to roughly zero. That would be tariffs on US products whose manufacturers would have to react with price reductions. This, in turn, would harm third countries whose economic output could fall by about five billion euros." All calculations assume adjustment reactions, 90 percent of which take place within five years.

The US Department of Commerce is to present a report by Sunday at the latest on the question of whether the high level of car imports poses a threat to US national security.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD falls to two-week lows as trade wars escalate, strong US data

EUR/USD is hovering above 1.1150, the lowest in two weeks as Chinese media reported that the country is no longer interested in talks with the US after the latter blacklisted Huawei. US Consumer Sentiment beat with 102.4.

EUR/USD News

GBP/USD hits lowest since January as cross-party Brexit talks collapse

GBP/USD hits the lowest levels since January, below 1.2750. The UK's Labour Party said there is no point in talking with a government about to collapse. UK PM May is set to step down in June.

GBP/USD News

USD/JPY fails again to break 110.00, turns flat for the day and the week

The USD/JPY pair found support around the 109.50 area and bounced to the upside, erasing losses.

USD/JPY News

Gold breaks to the downside hits 2-week lows near $1275

Gold prices accelerated to the downside today and particularly after the beginning of the American session, resuming the bearish move. The yellow metal is falling for the fourth day in-a-row and it is down almost $30 from the weekly high. 

Gold News

Bitcoin price update: BTC reclaims $7,000, recovery stalled

Bitcoin (BTC) has recovered from a scary flash crash that took it all the way down from $7,800 to as low as $6,512. The first digital coin lost about 16% of its value in a matter of hour with no particular reason .

Read more

Majors

Cryptocurrencies

Signatures