European exports to the United States are expected to drop by a quarter because of Washington’s newly imposed tariffs, according to estimates from Vienna’s institute of International Economic Studies (WIIW). In 2023, the U.S. received 19.7 percent of the EU’s total exports.
The industrial sectors in Germany and Austria could see significant losses, ranging from machinery to electronics. The two countries currently have some of Europe’s worst growth performance figures and will be especially hit by Washington’s 20 per cent levy.
Trump on Wednesday announced a 90 day pause on higher tariffs, saying “people were getting afraid”.
The paused tariffs, if they come into effect, look likely to reverse growth in trade. In 2023, almost 13 percent of German machinery deliveries went to the United States. This was the highest figure for more than 20 years, Germany’s Federal Statistical Office reports.
“Those countries who are more trade open like Germany and Austria will be affected a little bit more,” WIIW director Mario Holzner told CGTN. “We’re talking about 0.4 or 0.5 percent of GDP, which doesn’t sound a lot – but if you consider that current growth is around zero it makes a little bit of a difference.”
For countries like Germany, losing half a percent of GDP means more business failures and unemployment. At the same time, exporting less to the U.S. could mean more products remaining in Europe… which could lower prices for local consumers.
“While prices in the U.S. will increase by about three percent, EU prices will decline,” Holzner says. “Overall it’s a neutral effect for the economy’s welfare – consumers will gain a little bit, producers will lose a little bit.”
Alternative markets
And while producers may lose American customers, they also might gain them elsewhere. Austria’s Bösendorfer has been making pianos since 1828, with its highly regarded instruments being sent out around the world.
The average cost of a Bösendorfer piano is $250,000. Tariffs on those shipped to the United States will add an additional $50,000 – enough perhaps to prompt American clients to look elsewhere. No wonder some fear discord ahead for the world’s oldest premium piano manufacturer.
“We have to think, of course, to go into other markets and expand these markets or to reduce our production quantity if the prices are too high,” Bösendorfer director Sabine Grubmüller told CGTN.
Another option is to find alternative markets. While European companies may lose American customers, some are now trying to increase trade with alternative markets such as East Asia and South America. Changing times may lead producers to play a different tune.
