The recently published IAB research report shows the effects of possible tariff increases by the USA and the possible counter-tariffs of the affected trading partners on the labour market and economy in Germany. The underlying calculations are based on flat-rate tariff increases of 25 percentage points. This order of magnitude is assumed as there is uncertainty at the time of reporting as to whether announcements will continue to change or whether tariff rates will still be adjusted in negotiations.

In Germany, gross domestic product would be 1.2 per cent lower than in the QuBe baseline projection one year after the tariffs come into force - the number of people in employment would be 90,000 lower and the labour force 10,000 lower. The economic sectors most affected by the tariffs are primarily in the manufacturing industry. However, many business-related service sectors are also affected. Accordingly, the number of workers is falling not only in manufacturing but also in service professions.

The conclusion or expansion of free trade agreements could promote trade between the countries involved. This applies, for example, to the prompt ratification of the Mercosur agreement between the EU and the Mercosur states of Argentina, Brazil, Paraguay and Uruguay. The focus must also be on new markets for traditional export products. If sales of these products collapse in a previous main export market such as the USA, Germany and the EU should open up new markets, particularly in potentially high-growth countries such as Brazil and India.

You can find more information here (report in German language):