A decade of horror has begun for the German export industry. And the horror is greater the less the government understands what time has come.

Here are the five challenges of a country that has always owed its prosperity to a top-level export machine:

#1 Self-limited by high energy prices

100 percent more: The energy base of the German export industry has deteriorated in absolute and relative terms: since the beginning of the century, the price of industrial electricity per kilowatt hour has doubled.

The simultaneity of political objectives: punishing Russia for its war of aggression, quickly achieving climate neutrality and at the same time banning nuclear energy acts as a determining factor of first-order prices, so the government has already had to react reducing the electricity tax.

Moving forward is impossible: an increase in the price of electricity can easily be imposed on national citizens. This does not work in foreign trade. Customers are not willing to pay for politically motivated price increases. Especially since most countries in the world do not agree with at least two of Germany's three political goals.

“CO₂ reduction through forced deindustrialization is the wrong path”

The German trade surplus has been shrinking for years. A historic overtaking process is taking place, for which the president of the Federal Association of Wholesale and Foreign Trade, Dirk Jandura, is angry:

“CO₂ reduction through forced deindustrialization is the wrong approach. “We are not the shining example of climate protection for the rest of the world, but rather the chilling example of decline.”

#2 China begins export offensive 2.0

Export offensive as planned: The Chinese Communist Party's strategic planning foresees China achieving gigantic trade surpluses. In the first phase of the export offensive, China flooded the West mainly with inferior but cheap offers.

Cheap and a lot: Children's toys, Christmas decorations, wooden furniture, textiles and simple technical devices such as clock radios and CD players sold very well. Today China represents a third of the world's production of goods.

High technology follows: President Xi Jinping has ambitious goals. He is trying to outperform the high-tech segment, using government subsidies and political protection “to boost Chinese manufacturing,” in this way. Economist he writes in his current cover story.

The dominance of electric cars aims to: Thanks to its technological advantage and low manufacturing costs, it is believed that it can dominate the electric era. Market share will double, so that by 2030 a third of global electric car production will come from China.

#3 The United States seeks salvation in protectionism

No-go zone in the US? The United States will not function as the new China for the German export industry. Both Democrats and Republicans now see large trade deficits as a provocation.

The 10 percent idea: In his last term, Donald Trump mainly imposed tariffs on imports of products from the steel and aluminum industries. His advisers are now discussing a ten percent import tariff on all foreign products, which would significantly worsen Germany's competitive position.

Obsessive Trump: The United States is the most important country for German exporters with an export volume of 158 billion euros in 2023, ahead of France and China. However: 20 of the 27 EU states have a trade surplus with the United States, something that Trump in particular does not want to accept. The economist writes:

Trump is obsessed with finding trade deficits. For him, the 20 EU member states with trade surpluses with the United States are a natural target.

#4 Europe's leaders do not lead

Nation State Time: If only it were the British who have moved away from Europe. But virtually all European governments are united in the mistaken belief that now is the time for an inward-oriented economic, financial and social policy.

Obviously, the consensus of the coronavirus era has not been preserved to the present. Each one does their own thing in terms of energy policy. When it comes to migration policy, Europe produces many documents that have so far had no effect on the EU's external borders.

A European economic policy that, for example, would have to aim for a unified capital market as a prerequisite for higher investment volumes in the eurozone, fails because of small states.

Everyone wants to save the rules (and jobs) of their national banking regulator. Everyone wants to preserve their national banks (as a treasure chest for political emergencies). Nobody wants to accept a deposit protection fund in which Germans would have to be responsible for Italian savers (or vice versa).

#5 Traffic light with incorrect priority

No tailwind from Berlin: German exporters also do not have much to expect from the traffic light coalition in Berlin. In view of the upcoming electoral defeats in three German federal states (the SPD is within the five percent threshold in the polls in Saxony and Thuringia) and earlier in the European elections in June, foreign trade policy plays no role .

Welfare state first: The SPD considers the expansion of the welfare state to be its central task, which is why citizen benefits, basic social assistance for children and also subsidies for pension insurance are considered inviolable. The former director of Goldman Sachs in Germany, Jörg Kukies, was not hired by Scholz to review the expansionary policy of the welfare state, but to sell it to the economy.

State CO₂ reduction goal: The Greens are trying to push their climate agenda despite changing economic conditions. The suffering of the export industry is accepted with approval. It is considered a side effect of a transformation process that measures its success in reduction objectives (less energy consumption and fewer CO₂ emissions) and not in the growth of consumption, exports and, therefore, the gross domestic product.

Despair is prohibited

Liberal and economical: Given the proportions (the Red-Greens have 325 seats in the Bundestag, the Liberals 91), the FDP can only achieve a buffering effect. Its fiscal policy, which aims to stop the indebted State, is clean in terms of regulatory policy.

But in realpolitik terms, it is of little help to the economy in a world where the United States and China operate credit-financed programs. If they had the choice between stimulus and a debt brake, German exporters would know how to decide.

Conclusion: Holy Week has been canceled for the export industry. He lacks the benevolent God, which is why there cannot be a quick ascension. Desperation is still prohibited. As the god of export industry (and consolation), Confucius offers: “It is better to light a single small candle than to curse the darkness.”

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