According to a recent survey conducted by the Ifo Institute, US trade policies and tariffs are placing significant pressure on a large segment of the German industrial sector, increasingly influencing companies’ investment decisions.
Over 60 percent of all companies surveyed reported negative consequences resulting from the US tariffs. This impact is particularly pronounced in the automotive industry, where 74 percent of firms are affected-a rise of 14 percentage points compared to the previous year. Andreas Baur, an external trade expert at Ifo, commented that “the tariff burden has solidified instead of easing. The auto industry is doubly affected: by high tariffs and declining exports to the USA.”
Furthermore, the US tariff policy is steadily restraining investments within Germany. The proportion of companies that have canceled planned investment projects has almost doubled, jumping from 9 to 16 percent. Roughly one in three companies reported that they have postponed projects, reflecting an 11 percentage point increase. Sebastian Link, an Ifo researcher, noted that “the US tariff policy doesn’t just affect the business in the US itself; it is increasingly slowing investments at the German location. This is an alarm signal, especially because investment decisions are typically very sluggish.”
However, According to the Ifo experts, most companies have managed to transfer the additional tariff costs to their US customers through higher prices: 34 percent pass these costs on entirely, while another 28 percent pass on more than half of them. Nevertheless, one in four companies absorbs a large portion of these costs themselves, which inevitably impacts margins and overall business health. Most respondents do not anticipate a quick improvement in the situation; 63 percent of companies estimate that the high level of US tariffs will remain unchanged, and 13 percent even forecast further increases in tariffs.
