In 2018, during their trade conflict, the United States enforced an average import tax of 12.5 percent on goods from China. The immediate outcome? The Yuan has steadily depreciated by a comparable rate. What if the US applies an import tariff on goods from the Eurozone? For the European Union, the optimal response would be…
“A German friend shared with me just three years prior, ‘We Germans look to Moscow and Warsaw. Paris and London belong to history.’” This was still a prosperous era for a nation confident that globalization, which had greatly benefited its industries, would endure eternally. Angela Merkel, recognized as the “indispensable European” by The Economist, was viewed as Europe’s most influential leader, if not the globe’s!
Former German Chancellor Angela Merkel alongside former (and now returning) U.S. President Donald Trump at the G7 Summit.
However, three years ago, the decisions sealing Germany’s current trajectory had already been taken by successive Chancellors. They underscored their close ties with Vladimir Putin, lacking any critical perspective on his energy. This included Merkel’s sweeping and unilateral choice in 2011 to phase out all nuclear power plants in Germany. It was proclaimed that the foundation of a new Europe would depend on the pivotal bilateral relationship between Germany and Russia, epitomized by Nord Stream, which flows prominently beneath the Baltic Sea. The resultant linkage with China promised substantial trade surpluses.
Vladimir Putin.
For the country’s political and economic elite, the route appeared straightforward, regardless of whether German industry was anchored in a bygone age. The union of high-quality finished goods, cheap energy supply, and access to Chinese markets created the illusion that Germany could endure the encroaching threat of artificial intelligence.
German power plant.
Yet today, Germany confronts a genuine existential crisis, as its economic framework lies in tatters. It no longer recognizes who its allies are; it no longer understands its own identity. Germany is uncertain about its strengths and has lost clarity regarding its position in the world.
Chancellor Olaf Scholz, formerly a strong proponent of Germany’s unique relationship with China, exemplifies this uncertainty. Between 2011 and 2018, while he was mayor of Hamburg, Scholz visited China numerous times, receiving warm receptions from its top officials. Now, as Chancellor, he has been unable to endorse a European decision to impose tariffs on Chinese electric vehicles. Paralyzed by fears of trade disputes, Scholz openly admits Germany’s reliance on China—a dependency that creates significant challenges for the nation.
Chinese Electronic Vehicles.
The reality is that Chinese goods are now saturating the German market, proving to be extremely competitive. In contrast to Germany, China has invested heavily in cutting-edge 21st-century technologies, offering products that are not just less expensive but also superior in quality to those produced in Germany.
Germany’s decline is systematic, exacerbated by a loss of autonomy. Such are the repercussions of prolonged trade surpluses. Profits may have been achieved, but at the expense of dependence and independence.
A version of this piece was initially published on michelsanti.fr.
For further insights by the author, Michel Santi, and his exclusive opinions like this one, visit his website: michelsanti.fr.
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