A new study released by the Ifo Institute reveals a stark and uneven impact of US tariffs on European goods, highlighting a growing regional economic divide within Germany. The research, focusing on the effects on individual districts and independent cities, underscores a deepening North-South economic gradient and raises concerns about the long-term consequences for industrial heartlands.
The findings indicate that while some regions are experiencing marginal gains, predominantly those with a stronger service-based economy, others face substantial economic losses. Potsdam, Main-Taunus, Cottbus and Bonn are cited as beneficiaries, experiencing slight positive value-added effects, but the picture is far more concerning for industrial centers. Districts like Salzgitter, Dingolfing-Landau, Wolfsburg, Böblingen and Ingolstadt are braced for significant negative impacts, with value-added losses exceeding 1% in some cases.
Marcel Thum, head of the Ifo Institute’s Dresden office, emphasized the disproportionate effect, stating that the disparities are directly attributable to local economic structures. This isn’t merely an issue of trade friction; it’s a magnifying glass on existing regional imbalances within Germany. While service providers may be able to capitalize on changing market conditions and expand their share, the manufacturing sector, particularly in automotive and metal production, is facing crippling setbacks.
Robert Lehmann from the Ifo Institute’s Dresden branch warned of a potential long-term shift in Germany’s economic landscape. “The tariffs could, in the medium term, lead to a migration of economic activity from industry to the service sector” he stated. This scenario raises political challenges, as it potentially exacerbates unemployment in traditionally industrial areas and necessitates significant investment in retraining and economic diversification programs.
The uneven impact of the US tariffs is not simply an economic matter; it’s a political one. The stark regional differences risk fueling resentment and widening political fractures, particularly if the government fails to provide adequate support for the hardest-hit areas. Critics are already questioning whether the current policy responses are sufficient to mitigate the long-term consequences and ensure a more equitable distribution of the economic burden. The findings from the Ifo Institute provide crucial data for policymakers grappling with the complexities of international trade and its unequal impact on regional economies.
