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President Donald Trump and his administration are pursuing the goal of reducing trade deficits and strengthening the US economy and local employment by making imports more expensive, promoting local production, deregulating the energy and financial sectors, suspending ESG obligations and supporting future technologies and projects (such as the Stargate AI project or the colonisation of Mars). The new US administration has also pledged to reduce the US debt-to-GDP ratio, cut red tape and public administration and reduce public spending on international institutions and projects as well as debt servicing.

The US tariffs of 20 percent on EU imports initially announced on 2 April 2025 would lead to considerable cost increases for German exporters; the 25 percent tariffs on cars, car parts, steel and aluminium already do. Companies that export exclusively to the USA and compete with US producers will lose competitiveness. If losses persist, this could lead them to stop exporting or consider setting up production facilities in the USA. In sectors where demand in the USA cannot be met by local US producers, exporting German companies should try to pass on the additional costs of the tariffs to their sales prices. The introduction of additional tariffs of 20% was initially suspended for 90 days on 9 April. Until then, an additional duty of 10% will apply.

Many German companies currently use production facilities in various regions of the world, including Mexico, Vietnam, India and Thailand, and also export from there to the USA. If the additional tariffs were finally introduced in 90 days, these countries would be subject to even higher US tariffs than the EU (at 20 per cent), for example Mexico at 25 per cent, Vietnam at 46 per cent, India at 26 per cent and Thailand at 36 per cent. China, on the other hand, has not been granted a 90-day extension. German companies that manufacture in China and export to the USA must now pay 145 per cent additional tariffs.

German companies must now analyse their global production structures and supply chains and possibly relocate production capacities from countries with particularly high US tariffs. Ultimately, this may mean that production facilities that may have only recently been set up will have to be closed. The result: write-downs and thus charges on the balance sheets of German companies.

In addition, the newly introduced tariffs are expected to lead to greater localisation and regionalisation of supply chains within domestic markets or free trade areas, i.e. production in the EU for the EU, in Asia for Asia (including as part of the RCEP free trade agreement) and in the USA for the USA.

As a rule, purchased parts from various countries are used in production and intermediate products are repeatedly sent back and forth between the USA and other countries in multi-stage production processes. Each border transfer can trigger customs duties. Companies should therefore review and adjust their supply chains now in order to minimise the impact of customs duties on purchased parts and intermediate products.

The new US administration has repeatedly spoken out clearly against ESG (environmental, social and corporate governance) factors, as it considers them to be harmful to the economy. As a result, a whole series of measures have been taken to end ESG practices.

This includes, among other things, the revision of so-called DEI programmes ("Diversity, Equity & Inclusion"). A corresponding decree prohibits US federal authorities from using such programmes, as they are considered discriminatory and "illegal". The US administration is also calling on European companies to follow the US example and abolish their diversity programmes. Companies with US government contracts should give a binding assurance that they will comply with US regulations. For German companies that operate in the US, have concluded contracts with US authorities or maintain business relationships with US companies, this raises the question of how to deal with the different legal frameworks in the US and the EU.

It is expected that China will respond to the high new US tariffs of 145 per cent by redirecting its trade volumes to Europe. As the Chinese domestic market cannot fully absorb the volumes, it is possible that China will try to sell the excess capacity in Europe at lower prices. German companies may therefore face increasing competition in the EU market. It remains to be seen whether the EU will react to growing imports from China by introducing import tariffs against China.

Various announcements and measures by the new US administration have raised doubts about the USA's future defence readiness for Europe. Added to this is a new threat situation in Europe from the aggressor Russia. In response, the German Bundestag and Bundesrat have approved a comprehensive investment package of around one trillion euros, which is intended in particular for the military sector and civil infrastructure to increase defence capabilities. The EU Commission has also formulated a new approach to defence policy and wants to create an EU financial instrument to increase defence spending, which provides for loans totalling 150 billion euros. These measures could also benefit the German economy in the form of new sales.

The presidential decree banning diversity programmes will prohibit so-called DEI measures ("Diversity, Equity & Inclusion") in future, as these are considered discriminatory and "illegal". The US administration is also calling on European companies to follow the US example and cancel their diversity programmes. Companies with US government contracts should give a binding assurance that they will comply with US regulations. German companies that are active in the US, have concluded contracts with US authorities or maintain business relationships with US companies are faced with the question of how to deal with the divergent legal frameworks in the US and the EU.

The EU-US data protection agreement is also under scrutiny. The consequence would be that personal data could no longer be sent to the USA or processed using US clouds. In addition, there are further divergent regulations in the US and the EU - including with regard to the use of artificial intelligence, climate protection, compliance with regional norms and standards, the admissibility of certain ingredients in food and measures to prevent corruption.

Globally active German companies must adapt to a significantly more complex legal environment.