Transatlantic Economic Partnership Remains Strong – Trade Tensions Notwithstanding

Daniel Andrich © RGIT

Daniel Andrich © RGIT

Transatlantic trade is growing and mutual investments continue to increase. But the political relationship between the EU and the United States is more tense than it has been for years. We spoke to Daniel Andrich, the Representative of Germany Industry and Trade (RGIT) in Washington, D.C., about the state of economic relations between Germany and the United States.

What’s the current state of economic relations between Germany and the United States?

The transatlantic economic partnership continues to deepen each year. Germany is one of the five biggest foreign direct investors in the United States, having invested a total of 373 billion U.S. dollars to date. Transatlantic trade rose from 163 billion U.S. dollars in 2016 to 171 billion U.S. dollars in 2017. The United States remains the most important export market for German products. Around 674,000 people are employed at the U.S. subsidiaries of German companies. The figures speak for themselves.

Europe was exempted from the U.S. administration’s tariffs on steel and aluminium products. However, Trump’s protectionist trade policy is causing concern around the world. Does this policy pose a danger for the transatlantic economic partnership?

First of all, it is good for transatlantic relations that the EU was exempted from the tariffs. But the exemption is temporary and applies only until the end of May. Moreover, despite these waivers, there could be an escalation of reciprocal retaliatory measures, especially by those countries that do not enjoy any exemptions. Were this to happen, trade could suffer considerably on both sides of the Atlantic. In order to prevent a global protectionist spiral, all parties must be measured in their response.

What else is on the U.S. administration’s agenda for 2018?

The congressional midterm elections will take place in November. In the past, the ruling party has frequently lost seats in the Congress at these elections, thereby constraining its ability to act. Until then, the administration will have a busy schedule: The U.S. Trade Representative will continue to negotiate the North American Free Trade Agreement (NAFTA) and finalize the renegotiated trade agreement with South Korea (KORUS). The major U.S. tax reform has to be implemented. Moreover, in February the White House presented its 1.5 trillion U.S. dollars plan for revitalizing U.S. infrastructure. We are hoping that German companies will benefit, too, from the opportunities offered by this programme.

Daniel Andrich is head of the joint representation of the Federation of German Industries (BDI) and the Association of German Chambers of Commerce and Industry (DIHK) in the United States – the Representative of German Industry and Trade (RGIT).