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Will Germany face collateral damage in Trump's trade war?

By Shubham

While US President Donald Trump has targeted China in his trade war, it is Germany, the biggest economy of Europe, which has faced a risk of recession. According to researchers, Germany's risk of facing a recession has risen alarmingly between March and April 2018, a report in Washington Post has said on Monday, April 16.

US President Donald Trump

It said while economists with the German Institute for Macroeconomics and Economic Research (IMK) predicted a likely recession of 6.8 per cent in March for the next three months, the figure jumped many times more to 32.4 per cent in April.

Gustav Horn, research director of IMK, said the American president's adventurism with protectionism was creating shock waves that were not only affecting financial markets but the German economy.

Germany has been doing consistently well in terms of economic performance while other nations of Europe have struggled. Unemployment is very time low while the German government is having a gala time in collecting taxes.

But Germany has drawn Trump's wrath over its export-driven economy and large trade surplus as the latter has accused his European ally of exploiting America's economic interests. Germany, however, has rejected Trump's charges saying its investments in the US gave work to several thousands of workers there.

Trump though has not targeted Germany with tariffs as he has done vis-à-vis China but researchers have feared that his protectionist calls alone have caused enough uncertainty to financial markets and exports, the Washington Post report said.

This time, Trump is not alone

However, although Trump has deep differences with other European leaders, the latter have also felt like him on Germany. They feel that Germany has made huge gains at the expense of the rest of Europe for it has disproportionately benefited from the Eurozone where in shares a common currency with many weaker countries. Euro's relatively low value has helped Berlin's exports more than other underperforming countries, the WP report added.

Before Trump, even president Barack Obama felt that Germany should concentrate on boosting consumer demand and German imports from other countries of the EU instead of making its export industry more robust, the report said.

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