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What businessman Trump will mean for German business

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What businessman Trump will mean for German business
Photo: EPA
12:37 CET+01:00
Billionaire Donald Trump slid into the presidency on a wave of support bolstered by his perceived business prowess. But German and other international investors have major concerns about what he will mean for their own business future.

News that real estate mogul Donald Trump had won the US election immediately sent European stocks tumbling in open trade on Wednesday, and then recovering, while investors started to worry about the world economy.

Throughout his campaign, Trump had voiced criticism of major international trade deals and their impact on US jobs, like the Trans-Pacific Partnership (TPP), as well as the North American Free Trade Agreement (NAFTA) with Canada and Mexico. This has other international trade partners on edge about the world economy as a whole.
 
“There is massive uncertainty in the economy,” said Federation of German Industries (BDI) president Ulrich Grillo in a statement on Wednesday. “Donald Trump would be well advised not to wall off the US economy from the rest of the world. Otherwise, the lack of clarity about future developments will have a strong negative impact on the global economy.”
 
Germany is highly reliant on the US for its own growth: the United States’ market is the biggest in the world for products from Germany, and some 5,000 German firms are operating in the US, the BDI points out.
 
The Munich-based Ifo Institute for Economic Research reported that the Republican candidate's election victory could negatively hit the roughly 1.5 million jobs in Germany that depend on US business.
 
Trump’s protectionist leanings and scepticism of international trade deals - as well as his as yet undefined plans - have left a great deal of uncertainty among German investors, Berlin-based entrepreneur and investor Frederik Fleck explained to The Local.
 
“The worst thing for investors is uncertainty. Investors hate nothing more than uncertainty,” Fleck said.
 
“If you don’t know then you can’t plan accordingly and make decisions. It could hurt investments because people will have to wait to see if they want to invest.”
 
Fleck, who has founded various startups and worked in London, San Francisco and now Berlin, explained that one concern is how Trump’s presidency will impact the exchange between the Silicon Valley and German startup industries. If the global stock market starts to take a hit, this would have a knock-on effect for German startups.
 
“Although very few German and European startups are stock market-listed, there is always an impact on us nevertheless. The investors behind venture capital are often pension funds and other big institutions, which are tied to the stock market. So if we had a stock market crash like we had in 2008, that would also have an impact on startups.”
 
Another issue is Trump’s insistence on tightening immigration policies. This could block German investors and companies out of Silicon Valley, Fleck said.
 
“Immigration reform is a concern. When I first went to the States, I could get a visa and go as an investor very easily. But early stage startups have a harder time getting visas. It keeps out a lot of German businesses that might be better headquartering in the Bay Area.”
 
For Fleck, Trump’s presidency could also mean that his company, test IO, would have to take a slightly different direction. Before the election, the app- and software-testing firm had planned to expand into the US market. But depending on what Trump’s plans are, they may decide to “dial back” in the US and move into another European market instead.
 
Some good for Germany amid the unease
 
The current uncertainty surrounding Trump could, on the other hand, bring about a boost for Berlin: investors and businesses may see Germany as a more stable option for their money and for their headquarters.
 
"Maybe a lot of foreign money will go into Germany because it seems politically safe. But the question is what is [Trump] really going to do,” Berlin-based entrepreneur Max Kersting told The Local.
 
Other German experts were less pessimistic about the future. 
 
"I do not actually expect any big negative impacts for the German economy," German Institute for Economic Research in Berlin (DIW) president Marcel Fratzscher told DPA.
 
"Trump will not be able to implement his campaign promises of leaving the World Trade Organization or ending free trade with Europe," Fratzscher continued, adding that "the German economy is very strong globally, very diversified and very flexible."
 
Even Trump’s tough stance on immigration could in turn mean some positive impacts on Berlin.
 
“I think it could be, for the Berlin ecosystem, similar to Brexit, how the default before was to go to London and now companies are looking to headquarter in Berlin,” Fleck explained.
 
“I don’t think many people will move from the US to Berlin, but I’ve read that in the Bay Area, over half of startups were founded by non-Americans, so maybe some will think twice about moving there rather than to Berlin.”
 
Still, Fleck said that even if a loss for Silicon Valley means some gains for Berlin, it would overall still be a negative sign for the global tech industry.
 
“I think Germany can promise a stable eco-system, but I hope that it doesn’t hurt Silicon Valley,” he said.
 
“We often have to turn to American investors. There’s an exchange between Silicon Valley and I wouldn’t want that to be hurt.”
 
For Kersting and Fleck, the most they said many can do at this point is to wait to see how Trump will more clearly define his policies when it comes to international business. And hope for the best.
 
“If everything that he said in his campaign comes true, it would be a nightmare, but I just can’t believe it… He’s a businessman and he must have good advisors,” Fleck said.
 
“At the beginning there was a shock reaction and a lot of emotion, but now it’s important to keep calm and hope that it will be better than we thought. If it is bad, we must react, but we should try not to let the emotions run things too much.”
 
With DPA

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