In 2018, amidst their trade conflict, the US established an average tariff of 12.5 percent on Chinese imports. The result? The Yuan has steadily devalued by a comparable margin. Should the US apply additional tariffs on goods from the Eurozone, the European Union’s most effective countermeasure will be…
“We Germans turn our gaze towards Moscow and Warsaw. Paris and London are relics of the past,” a German friend confided to me merely three years ago. This was still a time of prosperity for a nation that believed the benefits of globalization for its industry would endure endlessly. Angela Merkel, labeled the “indispensable European” by The Economist, was viewed as Europe’s, if not the world’s, mightiest leader!
Former German Chancellor Angela Merkel and former (and now incumbent) U.S. President Donald Trump at the G7 Summit
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However, three years ago, the choices that would define Germany’s future were already set by successive Chancellors. They consistently highlighted their close ties with Vladimir Putin, lacking any critical stance toward his gas policies. This included Merkel’s unilateral and sweeping 2011 choice to phase out all of Germany’s nuclear plants. It was asserted that the cornerstone of a new Europe would depend on the vital German-Russian partnership, epitomized by Nord Stream, silently coursing beneath the Baltic Sea. This relationship, combined with China, was expected to secure favorable trade surpluses.
Vladimir Putin
For the country’s ruling economic and political elite, the trajectory seemed obvious, irrespective of the fact that German industry was entrenched in a bygone era. The blend of high-quality finished goods, access to inexpensive energy, and Chinese markets created the false impression that Germany could endure the impending rise of artificial intelligence.
German power plant
Yet today, Germany is confronted with a genuine existential threat, as its economic framework is in shambles. It is uncertain who its allies are; it is unclear what its identity is. Germany is unsure of its strengths and has lost track of its global position.
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Chancellor Olaf Scholz
Chancellor Olaf Scholz, once a fervent supporter of Germany’s unique relationship with China, signifies this ambiguity. Between 2011 and 2018, during his tenure as mayor of Hamburg, Scholz frequently visited China, where he was warmly welcomed by the country’s top officials. Now, in his role as Chancellor, he has been unable to promote a European initiative to impose tariffs on Chinese electric vehicles. Paralyzed by fears of trade retaliation, Scholz now candidly recognizes Germany’s reliance on China — a dependency that presents significant obstacles for his nation.
Chinese Electronic Vehicles
The truth is that Chinese goods are now saturating the German market, and they are extremely competitive. Unlike Germany, China has heavily invested in 21st-century technologies and now produces products that are not only more affordable but also superior in quality compared to those manufactured in Germany.
Germany’s decline is deeply rooted, exacerbated by a loss of autonomy. These are the repercussions of prolonged trade surpluses. While profits have been accrued, they came at the cost of dependence and sovereignty.
A version of this article initially appeared on michelsanti.fr
For more insights from the author, Michel Santi, and his exclusive opinion pieces, visit his website here: michelsanti.fr
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