© pichetw dreamstime.com Analysis | May 10, 2019
An escalation of trade war does not help
The German Mechanical Engineering Industry Association (VDMA), says that the increase of American punitive tariffs against China is damaging both countries. And the mechanical engineering industry in Europe is also being hit because uncertainty is on the rise.
Ulrich Ackermann, Head of the Foreign Trade Department of the VDMA, comments on the increase of American punitive tariffs on products from China from 10 to 25 percent: "With this further escalation of the trade war, both the US and China are on the losing side. The increase of punitive tariffs purse mostly the consumers, who have to pay higher prices for the imported products. US President Trump is wrong to believe that trade wars are easy to win." The VDMA has long been calling for the rapid conclusion of the EU investment agreement with China, which has been under negotiation since 2013. Ackermann continues stating that the techanical engineering industry in Europe will be hit by the increase of customs duties, because uncertainty in China, but also among the Chinese's trading partners, will continue to rise. "There is thus a danger that Chinese companies will hold back even more than before on investing in machinery and equipment. Mechanical engineering companies will also have to adjust to a further increase in competition as Chinese manufacturers push even harder into international markets." "The US demands on Beijing to open markets, increase intellectual property protection and end forced technology transfer are shared by us, too. However, these problems should be resolved through negotiation. The VDMA has long been calling for the rapid conclusion of the EU investment agreement with China, which has been under negotiation since 2013."