Brace Yourself: US-China Trade War Could Mean 17K-25K German Job Losses, Mainly in Manufacturing
Escalating US-China trade disputes might pose a potential threat to German employment
Gear up, folks! A trade war between the US and China could spell trouble for Germany's job market, according to economic analysts at credit insurer Allianz Trade. If both nations fail to reach a truce in their tariff dispute, Chinese exporters might start targeting European markets, primarily Germany.
Jasmin Groeschl, Allianz Trade's economist, paints a grim picture: "We estimate that 17,000 to 25,000 industrial jobs could be on the chopping block in Germany due to the increased competition and diversion of Chinese goods."
Germany's key industries at risk include mechanical engineering, textiles, non-metallic mineral products, electronics, computers, and motor vehicles. These sectors account for around 0.2 to 0.3 percent of total employment in the German industry, which is around eight million people.
Jobs will likely be hit hardest in the manufacturing sector and regions such as Upper Franconia, Tubingen, and Freiburg. The machinery and equipment sector alone could potentially lose 13,000 to 19,000 jobs, while 1,200 to 1,800 jobs in non-metallic mineral products are in danger, and around 2,200 to 3,300 jobs in the textile industry could face the ax.
With growing economic pressures and disruptive global trade, it's no wonder German companies are bracing themselves for layoffs. Almost a third of German firms expect to reduce their workforce by 2025, according to a study by the German Economic Institute (IW). This pessimism in industrial sectors is also reflected in declining demand and business expectations, reminiscent of the 2008 financial crisis.
Germany's export-dependent economy could take a hit from the US-China trade war. Experts at the Kiel Institute for the World Economy project that German exports might fall by just under 0.2%, and the country's economic output could shrink by about the same amount. This reduction in output could lead to job losses in the industries Germany is most known for—mechanical engineering, electronics, computers, and motor vehicles.
The textile industry, while smaller in Germany compared to countries like China or Vietnam, could still face indirect impacts through global market shifts. The US tariffs have caused a ripple effect in China's textile industry, leading to factory shutdowns and worker layoffs. The altered competitive landscape could impact textile employment in Germany through decreased demand or shifting trade flows.
So buckle up, folks! The US-China trade war could spell big trouble for Germany's job market, and it's essential to stay informed about how this global conflict could affect our industries and livelihoods.
Sources: ntv.de, rts, IW, Kiel Institute for the World Economy
[1] More than a third of German companies plan to reduce workforce by 2025 due to worsening economic conditions linked to US tariffs (IW)[2] German exports could fall by 0.2% and economic output could shrink by the same amount due to US-China trade war (Kiel Institute for the World Economy)[3] US tariffs have disrupted China’s textile industry, causing factory shutdowns and worker layoffs (Various sources)
- Given the likely impact of the US-China trade war on Germany's job market, it might be necessary for businesses to revise their community policy to address potential layoffs.
- The employment policy should be expanded to cover industries particularly at risk, such as mechanical engineering, textiles, non-metallic mineral products, electronics, computers, and motor vehicles, as mentioned in the Freiburg report.
- As job losses are likely to be concentrated in the manufacturing sector, employment policies must prioritize support and retraining programs for workers in regions like Upper Franconia, Tubingen, and Freiburg.
- With the potential for reduced demand in sectors like textiles, German companies may need to reevaluate their financing options and implement cost-cutting measures to stay competitive, as suggested by the new circumstances of this global trade conflict.
