Trade conflict EU business can compensate for declining US exports, according to study
According to experts, trade wars and increasing protectionism in the USA will put Europe back in the focus of the German export industry. Stronger growth within Europe could even more than compensate for shrinking US business.
25.03.2025, 07:22
SDA
However, this could only take full effect if the EU dismantles existing trade barriers. This is the conclusion reached by the auditing firm Deloitte in a new study on developments up to 2035.
The trade barriers announced by mid-March alone are likely to cause German exports to the USA to shrink by an average of 3.2 percent per year by 2035, according to the Deloitte experts. The result: US business would shrink from the current 84 billion to 59 billion euros within ten years.
Last fall, they had predicted growth of 1.8 percent per year in US business until 2035 - without the tariffs that have since been announced or introduced by US President Donald Trump.
European business dominates
In contrast, they have revised their forecasts for Europe upwards: exports to the ten most important customer countries are expected to grow by an average of 2.5 percent per year instead of the 1.8 percent expected in the fall. This could even more than compensate for the slump in US business - at least in nominal terms, without taking inflation into account.
The Deloitte experts calculate that the combined volume of the ten largest customers in Europe is already more than four times as high as that in the USA at 357 billion euros. By 2035, it would be almost eight times as much at 467 billion euros.
"The EU single market is a sleeping giant for German industry," says Oliver Bendig, Partner and Head of Industrial Consulting at Deloitte, according to a press release. However, this potential can only be fully exploited if the EU removes existing trade barriers.
According to the study, even stronger growth would then be possible. "In view of the increasingly protectionist tendencies in global trade, industry in Germany could do with a growth boost from Brussels."
Trade barriers even without customs duties
Even 30 years after the introduction of the European single market, there are still considerable burdens in business with other EU countries - despite the fact that there are no customs duties: differing product rules and certifications, different regulations on packaging and its disposal, increasing reporting requirements and complex tax regulations, for example. "The bureaucratic burden on German companies trading in Europe is very high and has increased further in recent years," says Bendig.
In total, this corresponds to a surcharge of up to 44 percent for industrial goods, according to Deloitte with reference to calculations by the International Monetary Fund (IMF). According to the study, if half of these burdens alone were removed, this would lead to additional growth of one percent per year in business with most EU countries by 2035.
If the barriers were completely removed, it would often even be possible to double the growth rate - with at least a further one percent increase per year in most EU countries.
Mechanical engineering in particular should benefit
According to the study, the mechanical engineering and electrical industries would be the main beneficiaries. This is because the burdens here have been particularly high to date.
The effect on cars and chemical products would be significantly lower. The burdens from trade barriers within Europe are already at their lowest here.
