Trump threatens tariffs and troops - what does that mean for us?

Trump threatens tariffs and troops - what does that mean for us?

In the United States, Donald Trump's return to the presidential office in January 2025 already attracted noticeable changes in internal and foreign policy. Today Trump used the national guard against demonstrators in California and did not rule out a troops in other cities. These developments ensure uncertainty and concern among the American population, in particular with regard to Trump's future actions.
Many Americans are disappointed with the promised measures to combat inflation. Despite the president's assurance, prices continue to increase. Experts also blame Trump's rigid customs policy for what contributes to inflation, and the public is increasingly concerned about the economic consequences.

expectations of customs policy

Trump plans to introduce high tariffs to imports from Mexico, Canada and China after his re -entry into the White House. These measures are among his first official acts and are intended as part of a strategy to reduce corporate tax from 21 to 15 percent. Trump sees the tariffs to finance these tax relief in order to reduce the chronic trade deficit of the United States, which was over $ 773 billion last year.
However, the tariffs are ultimately supported by US companies that import foreign products. These companies usually pass on the increased costs to consumers, which should lead to further inflation. The current key interest rate of the Federal Reserve is between 4.50 and 4.75 percent, and increasing inflation could influence the central bank's interest rate policy.

effects on the euro and German exports

The currency relation between the euro and dollar has also changed, with the euro lost value compared to the dollar. The course is currently just under $ 1.05. Experts speculate that the dollar could possibly be worth more than the euro, which could also increase entrepreneurial exchange rate risks. An introduction of ten percent tariffs to European goods could reduce German exports to the United States by 15 percent. In 2023, these exports amounted to 157.9 billion euros, which makes 9.9 %of the total German exports.
In particular, important industries such as pharmaceutical (24 %of exports), machines (13 %), motor vehicles (12.6 %) and data processing (9.6 %).

global consequences of the customs conflict

The possible situation could lead to China exporting its goods more and more to Europe. It would be conceivable that inflation would be steamed in the euro area. On the other hand, a global customs spiral could harm the economic conditions in Germany and heat inflation throughout the euro area. According to experts, Europe should prepare for a trade conflict and emphasize solidarity. A possible deal with Trump could also be promoted by concessions in areas such as military spending and imports of liquefied gas.