The business and economic relations between the US and Germany are quite peaceful and stable at the moment where international trade between the two countries can grow and prosper. Presently, the US is one of the biggest importers of German products alongside Chinese and French importing companies which are promoted among target clients and consumers by almost every advertising company.
In 2017, trade throughout the Atlantic was increased by 1.5%. In the following year, imports from America into Germany increased by 4%.
Increased German Investments in America
German businesses that have invested in America are claiming to receive positive financial outcomes, thanks to President Trump’s recent tax reforms. Earlier, Washington brought down the corporate profit tax rates to 21%, which lead to a sudden economic upturn.
Many traders and investing companies are concerned about the tariffs. AmCham Germany, however, reports promising business outcomes. Still, there is a level of uncertainty regarding the future trade relations between the two countries.
Predicted Trade Constraints
According to a survey made between American and German investors, it was revealed that lack of stability in US politics is negatively affecting investment opportunities. Only 8% of German investing companies in America claim President Trump’s economic and trade policies to be positive, whereas more than 30% of German investors believe business and trade conditions to become even more challenging in the coming years.
Interestingly, a large number of American companies that are investing in Germany believe trade conditions to be favorable. However, many American participants believe business relations with Germany to be tougher in the future, owing to the increased energy and manpower costs along with the digital infrastructure issue.
AmCham Germany’s President believes that making changes on a smaller scale may not be the answer to these challenges. Improving transatlantic cooperation, however, may help to counteract international trade restrictions.
These challenging economic conditions between the two countries are felt by a large segment of people who are in the government administration. Still, relations are comparatively better at an operational level.
Another major factor to consider is the appointment of former UN spokesman Richard A. Grenell as the US ambassador in Germany. The US ambassador has often questioned Germany’s nuclear relations with Iran.
Trade and the Automotive Industry
Germany’s automotive industry is also being affected by these deteriorating political relations. Moreover, an increase in the European auto tariffs from America may make relations between the two countries even more challenging in the coming years.
According to the German defence minister, America could impose the 25% tariff on European automobile exports in response to the German-Iran nuclear deal.
If the import tariffs on German cars are imposed by the US, the prices of car will also increase. This will create a disturbance in the production capacities and supply chains.
Effects of Increased Auto Tariffs on Trade
BMW has also criticized the increased auto tariffs imposed by the US Government. According to the German auto giant, the US is a more powerful market than Germany and therefore, Germany is more likely to suffer from the increased tariffs. The launch of BMW’s latest factory in Mexico can also suffer from the deteriorating trade relations between the US and Mexico.
Also, BMW’s largest factory is situated in South Carolina and the unstable trade relations between the US and China can affect the manufacturing of the BMW SUVs that are shipped to China.
Nevertheless, with the high tariffs, there are many other factors that are influencing the business relations between the US and Germany. Lack of trust and continuous political conflicts between the two countries is a major reason behind the reduced business and economic activities between the two countries.
The arise of trade and business disputes between the two countries, however, is not something that is new. The 1960’s great Chicken War where the Americans and Germans fought over the taxes charged on poultry clearly shows the complex trade relations between the two countries.
Conclusion
The business relations between the US and Germany can improve if the tariffs on German automobiles is postponed or reduced by the US Government. Moreover, the current political tensions of US between China and Mexico is also influencing the business activities of Germany with the US. Nevertheless, through continuous trade talks between Germany and the US, trade and business relations can improve and prosper in the coming years.
Many German investors can find it quite challenging to invest in the US and vice versa. However, getting business advice and support from a reliable consulting company such as Universal Hires, investing in foreign countries can be more quick, safe and secure.
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