The German Institute for Economic Research (Ifo) has estimated the financial damage to Europe’s main economy, Germany, from the trade war with China. If the country, like other EU members, cuts its economic ties with China, it will lose six times more than after the UK left the EU (Brexit).
The automotive industry (minus 8.47 percent of added value), manufacturers of transport equipment (minus 5.14 percent of added value) and mechanical engineering (minus 4.34 percent of added value) will suffer more than other sectors from the economic war. The authors of the study said that German companies should reorient themselves to other countries in order to reduce dependence on “certain markets and authoritarian regimes.”
The goal of German and EU economic policy should be “to establish strategic partnerships and free trade agreements with like-minded countries such as the US,” said Florian Dorn, co-author of the document. According to the researchers, a trade agreement between the EU and the US could mitigate the gap between European economies with China, but would not fully compensate for the losses.