Trump's tariffs threaten German industry: Greenland crisis escalates
A state of extreme turmoil has once again gripped German industry , which had hoped to recover after the interim trade agreement between the United States and the European Union. However, things have not gone as planned for Europe, as Berlin has been hit with new and unexpected US tariff threats, sparked by the renewed diplomatic dispute over Greenland .
Background to the conflict: Greenland as a geopolitical flashpoint
US President Donald Trump's desire to control Greenland is not a recent development, but rather stems from strategic considerations related to the island's vital location in the Arctic and its wealth of rare natural resources and minerals crucial to the technological and military industries. European, and specifically Danish, rejection of these efforts has transformed the issue from a mere international property purchase offer into a diplomatic and economic crisis, in which the White House is using tariffs as a tool of maximum pressure against allies as well as adversaries.
The German economy under scrutiny
By targeting the industrial sector, the entire German export economy, the main engine of the European economy, is shaken to its core. This comes at a particularly critical time, as GDP has seen only a very slight improvement, projected to grow by a mere 0.2% in 2025 after two years of painful recession. In this context, Carsten Brzezki, an economist at ING, accurately described the situation, saying, "These new tariffs will be like poison for Germany," indicating that they will undermine the "fragile recovery" that Berlin was counting on to escape its predicament.
The impact of the fees on growth plans
Berlin had been counting heavily on accelerating growth this year to 1.3%, driven by large public spending packages directed towards infrastructure and defense, in an attempt to stimulate domestic demand. But these optimistic projections were made before the US president threatened to upend the situation by imposing additional tariffs of 10% on imports from eight countries, including Germany, starting February 1st, with the threat of a dangerous escalation to 25% in June, as leverage in the Greenland dispute.
The cry of the industrial sectors
The reaction from within Germany was swift, with the head of the German Machine Tool Manufacturers' Association (VDW) bitterly questioning how to cope with this new reality. The sector is already reeling from previous 50% US tariffs on steel and aluminum, which have driven production costs skyrocketing. "How can we prepare for this with machines that already have six-month lead times?" the official asked, highlighting the impossibility of quickly adapting to sudden political decisions.
For its part, the Association of Small and Medium-Sized Enterprises (DMB), which forms the backbone of German industry (Mittelstand), confirmed that the recent threats constitute a “very serious indicator.” These pressures come at a time when German companies are already suffering the consequences of continuously rising energy prices as a result of the Russian-Ukrainian war, putting the competitiveness of German products in global markets to the test and threatening a decline in their market share to competitors from Asia and North America.
