Al-Quds newspaper

The Kiel Institute for the World Economy issued strong warnings about the repercussions of the expected increase in US customs duties on European car imports, indicating that it may cause a direct and strong shock to the largest economy on the Old Continent. The institute estimated that Germany would incur losses in its gross product amounting to about $18 billion if the US administration went ahead with the full implementation of the decision, which would put German exports at risk.

Moritz Schularek, head of the institute, confirmed in statements reported by media sources that the economic impacts will be tangible and widespread in the short and long term. The institute’s analysis expected industrial production losses to double to about 30 billion euros in the long term, compared to previous estimates that stood at around 15 billion euros, which reflects the extent of concern about new American trade policies.

This crisis will not be limited to Berlin alone, as experts have warned that the wave of economic decline will extend to other European countries that rely heavily on the automobile manufacturing sector, most notably Italy, Slovakia, and Sweden. These developments come at a very sensitive time, as the German economy faces a noticeable slowdown, with modest growth expectations not exceeding 0.8% during the current year, which makes any additional pressures a real threat to financial stability.

For his part, Jens Sodekom, senior advisor to the German Economy Minister, called for adopting a policy of caution and calm in dealing with the escalation coming from Washington, considering that waiting is the best option at the present time. Sodecom pointed out that recent history witnessed Trump backing down from similar tariff threats after negotiations, which opens the door to the possibility of political maneuvering before the decisions enter into actual implementation.

Economic analysts agree that the German auto sector, which includes giants such as Volkswagen, BMW and Mercedes-Benz, will be in the first line of confrontation with these fees. These measures are expected to lead to a sharp decline in American demand for luxury cars, in addition to higher market access costs, threatening industrial investment plans and jobs in this vital sector.

Trump recently announced his intention to raise customs duties on cars to 25% within the next few days, up from the 15% that was previously agreed upon with Brussels. Trump justified this step by accusing the European Union of violating the terms of the trade agreement signed last July with European Commission President Ursula von der Leyen, which aimed to maintain the stability of trade exchange within the framework of the Turnberry Agreement.