German Growth Stagnates as Trump Trade War Starts to Bite

Mr. Trump’s trade war has been weighing on European growth since early last year, but the effect was mostly psychological until recently. The uncertainty created by the administration’s tariffs made manufacturers reluctant to expand factories or add workers.

The tariffs’ impact is becoming more tangible, cutting into the earnings of companies like Salzgitter, a steel maker in the German city of the same name. Salzgitter warned this month that pretax profit in 2019 would be half or less than the 347 million euros, or $391 million, that the company earned in 2018.

American tariffs on steel imports are partly to blame, although mostly indirectly, said Bernhard Kleinermann, a Salzgitter spokesman. The levies caused producers in countries like Russia and Turkey to flood Europe with steel they could no longer sell to customers in the United States, driving down prices.

Trade was not the only dead weight on Germany’s growth. Britain’s looming departure from the European Union, and the prospect that it might happen without an agreement covering future economic relations, was another significant source of anxiety.

German carmakers struggled to comply with tougher emissions standards, which delayed delivery of new vehicles. Even an especially dry summer played a role. The level of the Rhine River fell so low that barge traffic became impossible, holding up shipments of German chemicals that normally travel by water.

Those were temporary problems, though, making some economists optimistic that growth could improve in the coming months. The horizon will seem much brighter if Britain overcomes its political deadlock and works out a deal with Brussels, and if the United States and China can resolve their differences over trade.

Economists also expect the Chinese government to stimulate the country’s economy, which would help revive demand for German products like cars and machine tools.

Article source: https://www.nytimes.com/2019/02/14/business/germany-economy.html?partner=rss&emc=rss