Trumps protectionism in punitive tariffs below the WTO

The future US president Donald Trump has threatened German autoclaves with high penalties should they produce their vehicles in Mexico, for example, and then export them to the USA. According to the rules of the World Trade Organization, this does not mean that there will be jobs for Americans in the medium term.

Trumps protectionism in punitive tariffs below the WTOTrumps protectionism in punitive tariffs below the WTO
The Volkswagen plant in Puebla / Mexico – In the interview with the “Bild” newspaper Trump threatened German car makers with punitive tolls if they set up factories in Mexico and want to export their cars to the USA. (Picture alliance / dpa / Heiko Lossie)

35 per cent of the penalties – this is reminiscent of the peak periods of world trade before the World Trade Organization (WTO) or its predecessor GATT. Since then tariffs have been steadily reduced and have now reached the lowest level of the last decades. Holger Bahr, head of the Economics Department of Dekabank, said that the contracting parties must stick to international trade agreements. But:

“There is an exception to the extent that it is possible to give specific reasons for a limited period of time – a maximum of one year.” Special reasons for very, very unfair trading offerings of the counterpart, which, under the aegis of Mr. Obama, I would like to know that the WTO is a good thing to do, and that it can lead to fines, monetary penalties if you look at it The rules of the WTO. ”

Jobs could only arise at short notice

But until it comes to this, some time may pass. In the meantime, some damage could be created in international trade relations. The American president can only terminate or re-unilaterally terminate international treaties unilaterally with the Congress – here the principle of “checks and balances”, the mutual power control. In the short term, the penalties could possibly lead to the reopening of one or the other plant in the USA, that is jobs. However, this looks different in the medium term, says Holger Bahr of the Dekabank:

“If American Americans are punishing these international relations with the abolition of free trade, they would have to do things themselves, which they obviously can not do as well, and directly lead to more expensive products becoming more expensive “The inflation rate would increase, purchasing power would be lost, probably the American central bank would have to counter-act, and that this would lead to more jobs, that is in no textbook and I would not expect so.”

A lot is at stake for Germany

However, even the trading partners should not stand idly to such an activity: Above all, strong partners such as China could, for example, with the restriction. Of the export of rare earths, which are needed for the construction of mobile phones. Mexico would have less to oppose. Germany also has a lot to play: after all, the US is now the largest trading partner. For example, the Association of German Machinery and Systems Engineering appealed to the American Congress to help quickly change Donald Trumps’ economic policy course. Clemens Fuest, President of the Ifo Institute in Munich, fears that if a Trumps policy fails, he can look for these scoundrels. And one of them could be the German economy with its export surpluses.

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