German Finance Minister Albert Füracker of the Christian Social Union (CSU) in Bavaria has expressed concerns that the tariffs imposed by US President Donald Trump could lead to significantly lower tax revenues in the region.
According to Füracker, the decline in profits of Bavarian companies due to tariffs would, in turn, result in a decrease in tax payments, ultimately affecting all levels of government, from the federal to the local level.
The CSU politician explained that a higher tariff on a product in the future cannot simply be added to the purchase price of the product in the US, as the product would no longer be competitive. “The profit an enterprise made with the product would be reduced, or even fully consumed, by the tariffs. And it is the enterprises that pay taxes on their profits.”
Füracker emphasized that German companies should not pay tariffs in the US instead of taxes in Germany.
The Bavarian government could potentially face a reduction in tax revenues, from the local to the state level, according to Füracker’s prognosis. “We will certainly feel the impact if a solution is not found soon. Trade wars do not benefit anyone” he said.