The US president's harsh trade policies are scaring off investors, with constant warnings about the US market. This creates new opportunities for Europe and Germany. Even American capital is starting to flow towards Europe.

Time is pressing: The deadline for reaching an agreement on the US-EU tariff dispute is July 9th. It remains uncertain whether the US will continue to impose high tariffs on Europe or whether the situation will escalate. Similarly, it is unclear what measures the EU will take in response. Despite the Trump administration's active pressure in recent months, international investors' doubts about the US economy are deepening, and their interest in Europe, especially in Germany, the largest European economy, is growing.

The US S&P 500 index has been in a downward trend since the beginning of this year, while the German DAX index has risen by over 15%, setting a new high.

Since Trump took office, the dollar has depreciated by 10% against the euro, and it has also declined against the British pound and the Swiss franc.

The International Monetary Fund (IMF) and the German Central Bank sound the alarm

In May, the head of the German Central Bank, Nagel, warned that financial markets could face renewed turbulence if the tariff issue is not resolved. Nagel described the situation of falling stock prices, weakening dollars, and rising bond yields following the US announcement of high tariffs on almost all trading partners with sharp words: "Sometimes, on certain days, I feel we are not far from a financial market collapse."

The International Monetary Fund (IMF) pointed out that US debt may be out of control. The IMF's Vice President, Gopinath, recently warned in an interview with the Financial Times that the US budget deficit is too large and that the US needs to address its "growing" debt burden.

According to the US Treasury, the US carries a massive debt of more than $36 trillion. Last year, the total US debt exceeded 120% of the GDP, nearly twice the debt-to-GDP ratio of Germany. Moreover, new debt increases every year.

Investors worry about the US market

Economist Schien also believes that the survival space for the current US debt model is shrinking. "Americans will have to tighten their belts. This standard of living, this world made up of shopping centers and a few factories, is unsustainable in the long run," said the former director of the Munich Ifo Institute, speaking to DW.

Economist Osak understands that the US is seeking to reduce its trade deficit with the EU, but the World Trade Organization's chief economist also agrees with the mainstream economics community's view that "from an economic perspective, basically all economists believe that tariffs are not an appropriate means to resolve the trade deficit," he told DW.

Osak compared the US approach to someone whose purchasing power exceeds their income, leading to debt. "If I have a debt problem - say, because I bought too many cars - then of course, I can consider taxing cars so that I won't buy as many. But this is obviously not the most direct way to solve the problem," Osak said when describing the US approach.

"Emotions have completely reversed"

Recently, the head of the German KfW bank, Winters, said in an interview with the German newspaper Handelsblatt that Trump's aggressive trade and tariff policies are scaring off investors, forcing them to turn their attention to Europe. "I observe that international investors' interest in Germany is increasing," he said. He mentioned that many institutional investors have too much exposure to US stocks and want to increase their investments in Europe, especially in Germany.

Winters also said that within just a few months, international investors' sentiments toward Europe and Germany have completely reversed. "In my more than 30-year career, I have never seen such a rapid change in sentiment. We should do our utmost to make sure that Germany and Europe can take full advantage of this strong momentum," he said.

Feeling the attraction of Europe and Germany

Even international asset management giants like Blackstone are being attracted to Europe. Blackstone CEO Schwarzman announced that the company plans to invest up to $50 billion in Europe over the next decade. In times of geopolitical turmoil, Europe and Germany are increasingly attractive to investors, which is also related to Germany's substantial infrastructure and defense investment plans.

"We see this as an excellent opportunity for us," Schwarzman said in an interview with Bloomberg in early June. "They are beginning to change their strategy, and we believe this will lead to higher growth rates."

Brussels has recognized that the EU must better utilize its huge internal consumer market. The European Commission hopes to address these "ten disadvantages," according to a leaked EU strategic document revealed by the media platform "Table Briefings." The calculation in the document states that to offset a 20% decline in exports to the US, EU internal goods trade only needs to grow by 2.4%. Achieving this goal includes reducing bureaucracy. This is expected to particularly benefit small and medium-sized enterprises, allowing them to operate more easily across borders within the EU. Additionally, Brussels needs to accelerate the pace of concluding free trade agreements with partner countries.

Currently, Europe is already benefiting from this new perspective. At the SuperReturn International investor conference in early June, thousands of large investors gathered in Berlin, with a total asset management volume of approximately 4.6 trillion euros, which is hailed as the world's largest private equity and venture capital conference. Many asset management institutions have shown strong interest in Europe as an investment destination. Apollo Global Management, based in New York, stated that the weight of Europe in its $800 billion investment portfolio has reached about $100 billion, and it plans to further increase its investments in Germany over the next decade.

"We believe there is an opportunity to invest up to $100 billion in Germany alone over the next decade," Zelt of Apollo Global Management told the Financial Times, adding that "this is a number that is difficult to surpass globally."

Sources: DW

Original: https://www.toutiao.com/article/7524027483755119140/

Statement: The article represents the views of the author and reader's attitude can be expressed by clicking the 【top/down】 button below.