Improvement noted in the atmosphere of Bavaria's metal and electrical sectors
The EU-US trade agreement, which imposes a 15% tariff on EU metal and electrical exports to the US, has caused significant adverse effects for Bavaria's metal and electrical industry. The agreement, which allows American goods to enter the EU tariff-free, has resulted in increased costs and reduced competitiveness for Bavarian exporters in the US market.
A survey conducted from July 2nd to 23rd, involving 193 companies with around 247,000 employees, revealed that more than half of these companies or their US importers had to pay tariffs on exported goods since early April. In contrast, 26 percent of exporting companies reported that they did not have to pay additional tariffs.
The agreement has a particularly heavy impact on Bavarian steel mills and metal manufacturers, which are heavily reliant on US exports. The lack of a reciprocal reduction of tariffs on US exports entering the EU further disadvantages German industry, notably Bavaria's metal and electrical sectors. This disadvantage is expected to lead to economic losses and export strain on the industry.
The Institute for Economic Research estimates that the deal will reduce the German economy's GDP by approximately €6.5 billion in its first year. Industry groups like the Federation of German Industries (BDI) warn that the 15% tariff induces "immense negative effects" and signals a damaging shift in transatlantic trade relations.
Bavarian electrical manufacturers, part of the wider German electrical industry, also face parallel trade barriers, worsening their export prospects and investment climate. The tariff hike is viewed as a significant setback, undermining the previously rules-based trade framework and creating an uncertain commercial environment.
Despite these challenges, many companies show cautious optimism. However, the skills shortage remains a central issue, with 53 percent of companies reporting significant hindrances to their production and business activities due to a lack of skilled workers.
The survey also revealed that 56 percent of the companies surveyed export to the USA. When asked about the business situation in Germany, 30 percent of employers rated it as poor, while only 22 percent rated it as good.
In conclusion, the Bavarian metal and electrical industries will suffer from elevated US tariffs that reduce export volumes and profitability. The broader German economy faces multibillion-euro losses, with industry stakeholders condemning the agreement for its one-sidedness and negative impact on competitiveness and jobs.
- The significant adverse effects of the EU-US trade agreement, as observed in Bavaria's metal and electrical industry, have prompted the finance department of these companies to allocate more resources towards paying tariffs on exported goods.
- The business sector in Germany, particularly the manufacturing industry like Bavaria's metal and electrical industries, is facing financial challenges due to the increased costs and reduced competitiveness stemming from the 15% tariff imposed by the EU-US trade agreement.
