Everyone in Germany knows to beware the so-called enkeltrick or grandchild trick: phone calls from a panicked grandchild warning of looming disaster unless their beloved grandparent plunders their savings.<\/p>\n
It\u2019s a scam that can have an expensive outcome. Since Monday, Europe\u2019s largest economy has been bracing itself for the biggest enkeltrick of all time: the incalculable cost of US tariffs<\/a> of 30 per cent threatened on European Union products by US president Donald Trump<\/a>, grandson of a German emigrant.<\/p>\n Like Ireland, Germany is particularly exposed to threats as the US is its largest export market. Last year it sold goods worth \u20ac161 billion to the US, nearly 10 per cent of the EU\u2019s total, running up a trade surplus of nearly \u20ac70 billion. <\/p>\n Many German blue-chip companies are already feeling the squeeze of previous Trump administration tariffs on the vehicle, automotive components and pharmaceuticals sectors. Mercedes-Benz<\/a> and Porsche<\/a> sell every fourth luxury vehicle in the US, but have reported a slide of 12 and 6 per cent respectively \u2013 despite a rush to sell pre-tariff inventory.<\/p>\n No one knows what next month, let alone next year, will bring, not even chancellor Friedrich Merz<\/a>. The 69 year-old German leader, in office just 10 weeks, had been hopeful he had struck the right, pragmatic note in his first Oval Office meeting<\/a> last month with Trump. <\/p>\n The two exchanged mobile numbers and last spoke by phone just over a week ago. In that call, Merz said in a subsequent interview, Trump gave no indication of what he would announce one day later. <\/p>\n If implemented as threatened, Merz said the tariffs would \u201cstrike at the German export industry\u2019s bone marrow\u201d. And not just that: two months after taking office, Merz conceded: \u201cWe would have to put large parts of our economic policy on hold because it would overshadow everything else.\u201d<\/p>\n Exports make up 42 per cent of German gross domestic product but they have been in decline for more than two years, falling last year by 1.7 per cent and 0.9 per cent a year earlier.<\/p>\n The economy is in an unprecedented third year of recession and the exports outlook for next year looks grim. Even before last Saturday\u2019s threat, Germany\u2019s leading economic institutes predicted a decline in exports of 4.1 per cent this year.<\/p>\n Behind the boos and hissing however, many analysts in Germany concede the Trump trade war threats have merely exposed and exacerbated a long-term and home-made German economic decline.<\/p>\n Despite a general bounce in post-pandemic global trade, the tide is no longer lifting the German boat. Decline set in during Trump 1.0, according to a stark study this week from the Bundesbank<\/a> as it laid out in black and white how much export weakness is hitting the wider German economy.<\/p>\n According to the central bank, in the three years to 2024 German GDP would have risen 2.4 percentage points more than it actually did if German exporters had merely maintained their global market share. <\/p>\n Its economists points to four key causes: weak demand in customer countries; a drop in the attraction of German products; supply shocks on foreign markets caused by sharp tariff increases; and, most urgently, the rise of competition and a decline in German exporters\u2019 price-performance ratio.<\/p>\n