US Tariffs May Cut Exports by 22 Percent, German Exports to Benefit
According to calculations by the Munich Ifo Institute, the tariffs on imports from Canada, Mexico and China, announced by US President Donald Trump but not yet fully in effect, could reduce the United States’ exports by 22 percent. The institute’s head of the Center for Foreign Trade, Lisandra Flach, said that Canada and Mexico would also be severely affected. “In the event of retaliatory measures against US tariffs, Canada would have to reckon with a 28 percent decline in its total exports and Mexico with a 35 percent decline” Flach said. While China could shift its trade with the US, Canada and Mexico are much more strongly tied to the US due to their geographical location. The impact would be the least for China (decline of 3.8 percent), according to the economist.
Germany’s total exports, in contrast, would increase slightly according to the Ifo calculations (growth of 0.5 percent). “The effect on German exports is two-edged: on the one hand, the US tariffs would reduce the demand of the Canadian and Mexican economies for German goods. On the other hand, German exports to the US, Canada, Mexico, or China would displace them” Flach said. Moreover, “due to Trump’s threats to impose tariffs on US imports from the EU in the near future, the chances of such an export growth seem very low in the near future.”
In the medium term, Canada could expect a 14 percent decline in its industrial value added and Mexico a 13 percent decline. In China, the decline would be almost one percent. This is shown by the institute’s calculations, taking into account the countermeasures of the affected countries in response to the US tariffs.
Without countermeasures on the US tariffs, the decline in industrial value added in Canada would be slightly higher (15 percent). In Mexico, the industrial value added would decline by almost 10 percent. The decline in total exports would also be lower without countermeasures: for Canada, 17 percent; for Mexico, 21 percent and in the US itself, 14 percent. Without countermeasures, the export decline for China would be 2.7 percent. German exports would minimally increase, by 0.2 percent.