New figures show U.S.-China trade war is hurting Germany – Europe’s economic motor

Europe

Like a sleek Mercedes crunched between two freight trucks, Europe’s economy is being knocked off course by the conflict between the U.S. and China over trade.Story continues below

The bill for damages from the U.S-China collision could be reflected in new growth figures due Wednesday that could show that Europe’s economic motor, Germany, is stalled or shrinking. Beyond that, economists say there are signs that years of declining unemployment since the depths of the Great Recession and the eurozone debt crisis may be ending.And if the trade wars escalate to include higher U.S. tariffs on cars made in Europe, the picture could look even worse.READ MORE: U.S.-China trade dispute is weakening global oil demand, says IEAThe heart of the matter is Germany, Europe’s largest economy and a key trade partner of both the U.S. and China.Exports amount to almost half the German economy — 47 per cent, according to the World Bank — as its companies play a dominant role in global markets for luxury autos and complex industrial machinery. Supply chains from Germany extend into neighbouring eurozone countries as well, while German profits are often invested in factories in places like Slovakia, Hungary and Poland. Great when trade is booming — but it means Germany remains more vulnerable than less open economies such as Portugal or France to a slowdown in global trade in goods and services.And that is what’s happening.WATCH: China warns retaliation over new tariff threat from Trump

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