America is changing for the better

Dieter Kempf wanted to speak "with all diplomatic caution", but he did not succeed. "I was not surprised that whoever made the statement made it," said the president of the industry association BDI a few hours after US President Donald Trump declared himself the winner and wanted to end the further counting of votes. All diplomatic restraint is gone, the relationship between German industry and the Trump administration is so broken: This will no longer lead to friendship.

It doesn't have to, because it has been clear since Saturday: Joe Biden is the new elected President of the USA. For the German economy, it is now about a kind of rebuilding of relations. After all, the USA is Germany's largest export partner. Last year America bought goods worth 119 billion euros from German companies, almost a quarter of which were cars.

The President of the Kiel Institute for the World Economy, Gabriel Felbermayr, expects a new willingness to cooperate "and more respect for domestic and international institutions" from a Biden government. Economic growth is not as central to Biden as it is to Trump. "He gives higher priority to environmental protection, social justice and better public infrastructure." In the short term, this could come at the expense of growth dynamics. In the long term, however, the containment of economic inequality in the USA could even strengthen the growth dynamic.

But nobody in the German economy is illusions - despite Biden. "A new communicative togetherness," says one of the leading strategists, "that would be a lot." The director of the union-affiliated Institute for Macroeconomics and Business Cycle Research, Sebastian Dullien, dampens expectations: "The tight majority in the Senate and the conservative dominance in the Supreme Court will lead to far-reaching reforms and the huge spending of almost ten trillion dollars announced by Biden during the election campaign probably prevent it for the next ten years. " For the German economy, he sees only moderate demand effects from US investment programs.

The trade dispute

The US imposed punitive tariffs under Trump, the EU held against them - and at the same time tried to de-escalate the dispute. Will that work better with Biden? As the president of a deeply divided country, he should avoid radical course corrections. Especially since he made it clear that for him too the Americans are in the foreground and not the relationship to the rest of the world. "America first" is no stranger to Biden either. He announced during the election campaign that he would only conclude new trade agreements when the Americans were ready for global competition.

The remaining hopes of the German economy for a trade agreement between the EU and the USA, similar to the failed TTIP agreement, are likely to fade. Even if the chemical industry hoped that the USA would move towards a constructive strategy in trade and climate policy at the weekend and the electrical industry called for quick talks on reviving the World Trade Organization "and a new trade agreement".

One thing is clear: there are also reservations about China in the ranks of the US Democrats. But the Europeans cannot afford a transatlantic alliance against Chinese power - China is too important as a sales market for that. And the sanctions against Iran and Russia, which threaten everyone who does business in these countries and in the USA with their extraterritorial effects, are based on a large consensus between Democrats and Republicans. The German economy does not even need to hope for an easing.

Nord Stream 2

The same applies to the controversial Nord Stream 2 pipeline project. Trump fought with all his might against the completion of the Baltic Sea pipeline; but also with the active help of the Democrats. Ironically, the brutal announcements from the White House had contributed to closing the ranks among the Europeans - although many EU partners think as little of the gas pipes between Russia and Germany as Washington. At best, a silent toleration would be conceivable: After all, only 160 of the total of 2,360 kilometers of pipeline remain to be built. The Russian laying vessels could move out and take advantage of the interregnum. However, it is unlikely that this would have no consequences under President Biden: When it comes to sanctions against Russia, the Democrats have recently been even more uncompromising than Trump. Biden himself described Russia as a "threat" during the election campaign.

The auto industry

For hardly any other industry was the US election more important than for the auto industry. Trump had repeatedly threatened the EU with punitive tariffs on cars, which would have hit the export-oriented German manufacturers hard. The president of the VDA lobby association, Hildegard Müller, is preparing for difficult talks. Europe will have to deal with it, she says, that America will formulate its interests - no matter who rules there. Three out of four cars that roll off the production line in Germany are exported, the majority of them to the USA.

After the election, VW was the first automaker to make it clear that there are still some hopes associated with Biden. It is true that VW has also established "trusting relationships" with the Trump administration. CEO Herbert Diess said at an online conference of the Bloomberg news agency: "A democratic program would probably be more in line with our global strategy, namely to combat climate change and to become electric." VW is focusing heavily on building electric cars, and Biden had announced plans to reverse Trump's exit from the Paris Agreement. That would be a ray of hope for the German economy, because the return of the Americans to the agreement should drive investments in climate-friendly technologies - much to the benefit of many German companies, especially car manufacturers.

International taxation

The corona virus has catapulted the world into the digital age, and many German citizens are also using the services of American digital corporations. What is still missing, however, are international rules for their taxation. Trump never left any doubt that he would view any country that dared to impose a national tax on digital services as opponents and reserve the right to take countermeasures. The federal government always took Trump's threats very seriously and waived a digital tax. Instead, it tried to negotiate a minimum tax for corporations and a digital tax at the level of the OECD, i.e. the industrialized countries. France stood on the side of Berlin, but set a deadline: If there is no result by the end of 2020, a digital tax will be introduced in Europe.

Most recently, the US dropped out of the talks; nothing should be decided until the US election. No contacts have been made in Biden's team, according to the Federal Ministry of Finance. On "digital taxation and minimum taxes", the ministry is "in regular contact with various interlocutors in the USA," said a spokeswoman for Federal Finance Minister Olaf Scholz (SPD). One speaks in particular about "the distribution of taxation rights between the states and the introduction of a global effective minimum taxation".

In addition to all these major construction sites, many German companies are plagued by completely different, tangible everyday problems when dealing with the USA. When the German Chamber of Commerce and Industry recently asked companies about their greatest difficulties in US business, 90 percent replied: Travel restrictions due to the corona pandemic.