The economic policy agenda of US President Donald Trump will have a significant impact on the business activities of companies in the German-American economic corridor and beyond. In current studies and detailed analyses, we shed light on the possible consequences of a change of course in Washington – and how companies should react.
What the German economy should prepare for now
What is the new US administration under the presidency of Donald Trump planning - and how should German companies react? Backgrounds, classifications, sectors in focus as well as strategy and action recommendations in compact form.
Andreas Glunz
Managing Partner International Business
KPMG AG Wirtschaftsprüfungsgesellschaft
The most important questions and answers on the new US administration economic plans on German companies
Donald Trump has begun his second term as US President in January 2025. His credo remains "America first". This means that the agenda in the White House will be dominated by issues that the new US administration believes are fundamental to national interests. The envisaged economic policy realignment in Washington could have particularly far-reaching consequences for German companies. What can we expect? And how should companies adapt their strategy in order to continue to operate successfully on the US market? We present the most important details in a compact and precise manner.
President Donald Trump and his administration want to strengthen the USA as a business location by reducing corporate taxes and making the national or regional market less attractive for imported goods from abroad. Drastic protectionist measures at the expense of long-standing trading partners such as Germany are likely. The new US administration is also planning to deregulate various sectors, including the energy and financial sectors, and suspend ESG obligations.
The announced support measures for the American economy are boosting the location. The top corporate tax rate was already reduced from 35 per cent to 21 per cent during Trump's first term in office. Now the new US administration is promising companies that produce in the USA a further reduction to 15 per cent, while imports will become massively more expensive. At the same time, a more rigid migration policy - also announced - could exacerbate the shortage of skilled labour.
Changes or even a suspension of the IRA would slow down the sustainable transformation towards a climate-neutral economy: Subsidies for renewable energies would be cancelled, and "green" projects could no longer receive tax breaks. Meanwhile, oil and gas projects will become more lucrative. It is also to be expected that technology investments will increase significantly, as a number of government restrictions are likely to be removed.
The new US administration is planning to introduce import tariffs of 10 to 20 per cent across the board, not least because of the US's consistently high trade deficit with the EU. If the EU were to respond to the new financial hurdles with retaliatory tariffs on US imports, President Trump has said that he would immediately follow up: even tariffs of more than 100 per cent are conceivable. This could trigger an escalating race of trade restrictions that would also damage the USA as a business location.
According to analysts, new US tariffs could lead to an economic downturn of 1 to around 1.5 per cent in Germany. A recession would then be inevitable. It is also possible that US companies will postpone planned investments in Germany or refrain from them altogether as the general conditions on the domestic market improve. Germany is already no longer a prioritised location for US investments in more traditional industries and its relevance could decline once again. However, the situation is different with regard to new business areas that are emerging in Germany in view of the major transformations. Here, greenfield investments worth billions of euros in data centres, microchip factories and ultra-modern production facilities for pharmaceutical products have recently been made from the USA.
Es ist jetzt essenziell, exportlastige US-Geschäftsstrategien zu überprüfen. Geschäftsmodelle, die beispielsweise ausschließlich auf dem Warenexport in die USA basieren, könnten künftig die Wettbewerbsfähigkeit massiv einschränken. Um den Zugang zum US-Markt zu kompetitiven Preisen zu sichern, kann der Aufbau von Produktionskapazitäten vor Ort erforderlich werden. Die Wertschöpfungskette sollte weiter regionalisiert werden – aber auch Desinvestitionen könnten sinnvoll werden.
China is particularly in President Trump's sights. He accuses the growing superpower of unfair economic policies at the expense of the US. It cannot be ruled out that the new US administration will link the maintenance of current trade links between the US and Europe to EU compliance in the fight against Chinese production and export strength. China is just as important to German companies as the USA and forgoing one of the two markets is not an option.
The new US administration has the means to implement far-reaching measures, as both the US House of Representatives and the US Senate are now under Republican leadership. He is also better prepared now than when he was first elected. It is therefore conceivable that structural, far-reaching changes will be made quickly, which can only be reversed with great difficulty after the end of Donald Trump's second term in office. The redirection of global trade flows that have grown over decades, characterised by a protectionist world view, would have serious long-term consequences for the export-oriented German economy in particular.
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