The German aluminium industry is watching the increase in tariffs on imports of aluminium products to the USA to 25 percent with concern. According to the industry association Aluminium Deutschland, this measure puts the established cooperation between companies on both sides of the Atlantic under considerable strain. According to simulations by the Kiel Institute for the World Economy (IfW), however, the US tariffs on steel and aluminium imports will harm the USA more than the EU.
The measures announced by US President Donald Trump Tariffs of 25 percent on all steel and aluminium imports came into force this week. According to the presidential decree of 11 February the import quotas for aluminium, which the EU and the US, among others, had agreed on at the end of 2021, were terminated and replaced by tariffs of 25 per cent from 12 March. The EU Commission responded immediately with counter-tariffs on US products.
„It is now up to the European Commission to enter into a constructive dialogue with the US administration. We must avoid an escalation in trade policy. It harms everyone involved.“
Rob van Gils, President of Aluminium Deutschland (AD)
A projected 51,000 tonnes of aluminium products were delivered from the German plants to customers in the USA in 2024 (15,000 tonnes of rolled products, 12,000 tonnes of extruded products, 24,000 tonnes of aluminium foil). This corresponds to two per cent of annual production in Germany. In the last ten years, German aluminium producers have almost halved their exports to the USA (-45 percent).
„Even if the quantities exported from Germany are comparatively small, the measures are hitting our companies in an already tense period. We must also pay close attention to possible diversion effects from third countries into the European Union. These would have the potential to cause much greater damage to domestic companies. The Commission must be prepared and ready to act in this case.“
Rob van Gils
Keep the door open for negotiations
In response to the US tariffs imposed, the EU Commission announced that it would impose extra tariffs of its own. Imports of American bourbon whiskey, jeans, motorbikes and peanut butter are to be will also be taxed from April. The President of the German Wholesale, Foreign Trade and Services Association (BGA), Dr Dirk Jandura, was among those to comment on the decision: „An immediate and clear response from the EU Commission is the right reaction to the decisions made by the US administration in recent weeks. Europe must show strength in the face of Trump. At the same time, the door must remain open for further negotiations and the Commission should seek dialogue for mediation. Our goal is not a trade war, but an agreement on free trade and the movement of goods between our trading areas.“
ECB and IfW forecast damage for the USA
The Kiel Institute for the World Economy (IfW) recently predicted that the US tariffs on steel and aluminium imports would harm the US more than the EU. The European Central Bank (ECB) also believes that a trade war triggered by US President Donald Trump would have major economic consequences worldwide. However, the USA itself would suffer the greatest damage, ECB President Christine Lagarde announced.
According to a Simulations by the Kiel Institute for the World Economy the US tariffs on steel and aluminium mean a short-term decline in real gross domestic product of just 0.02% for the EU economy. This small effect is due to the fact that the affected products only account for around five per cent of total EU exports and only a small proportion of these are exported to the USA.
On the other hand the economic damage that the USA is inflicting on itself as a result are likely. Prices are likely to rise by 0.41 per cent, causing the inflation rate to rise. Exports are likely to fall by 1.37 per cent. Imported steel and aluminium will become considerably more expensive, thereby also increasing the production costs of many American industries - US producers of steel and aluminium are likely to pass this price increase on to their customers at home, while their competitiveness abroad will decline, according to the IfW simulation.
„These tariffs may appear symbolically as a protectionist measure in the spirit of America-first, but ultimately they harm US economic interests. Even if the direct effects of Trump's tariff policy on the EU are not significant, they signal the potential for further protectionist measures. The EU must remain vigilant and prepare for a possible escalation. A strategic Europe's priority must therefore be to diversify trade and strengthen economic resilience. be.“
Julian Hinz, Research Director for Trade Policy at the Kiel Institute for the World Economy
To support the ongoing analysis of global trade policies, the Kiel Institute has developed the Kiel Trade and Tariffs Monitor was launched. The platform provides up-to-date information and structured data sets on the latest customs changes and thus aims to facilitate informed discussions and research in the area of trade policy.
Source: Aluminium Germany / BGA / Kiel Institute for the World Economy
