A significant shift in global trade relations, away from the United States, is anticipated by a substantial portion of German industrial companies, according to a new survey released Thursday by the Ifo Institute in Munich. The research indicates that only 17% of companies expect increased trade with the US, while approximately one-third foresee a decline in the market’s importance.
The survey revealed that over 60% of industrial firms are experiencing adverse effects from US tariffs introduced earlier this year. Export-intensive sectors, including mechanical engineering (87% reporting negative impacts) and metal production (68%), are particularly affected. Even companies operating within the US are feeling the strain, with over 80% citing tangible disadvantages resulting from the tariffs.
“The tariffs imposed by the US administration represent a profound shock to global trade policy, compelling businesses to re-evaluate markets and re-align investment strategies” stated Andreas Baur, Ifo trade expert.
The survey also highlights a growing interest in alternative markets. Roughly 40% of companies expect increased sales opportunities within the EU single market and in India. Opinions regarding the Chinese market are more varied; however, 25% anticipate growing significance for their business there, while a smaller proportion (17%) foresee a decrease. Furthermore, a majority (59%) predict that Chinese suppliers will intensify their push into European markets as a consequence of the US tariffs, increasing competitive pressure on the German industrial sector.
Lisandra Flach, head of the Ifo Center for Foreign Economic Relations, emphasized the need for proactive policy responses. “To ensure the continued success of German companies in international competition, policymakers must create reliable frameworks and facilitate access to new markets” she said. She specifically mentioned the swift ratification of the EU-Mercosur agreement, the advancement of further trade deals and the reduction of barriers within the EU single market.
The impact is already manifesting in altered investment plans. Close to 30% of companies with planned investments in the US have postponed projects, while 15% have cancelled them altogether. Investment within Germany is also experiencing a slowdown; 21% are postponing projects and 8% have cancelled investments, particularly among firms negatively impacted by US tariffs.
