Trade barriers are holding back German companies

Survey "Going International": Increasing protectionism is weighing on international business

German companies are facing increasingly more trade barriers in their international business. This is the outcome of the current survey "Going International" by the German Chamber of Industry and Commerce (DIHK) among nearly 2,400 companies. The results were presented by DIHK President Peter Adrian and international trade expert Melanie Vogelbach on Friday (March 15th) in Berlin.

61 percent of the companies - the highest number ever recorded in the survey - complain about an increase in trade barriers in their international business. This continues the trend of increasing trade barriers. "On many important foreign markets, companies encounter obstacles. This additionally slows down the urgently needed upturn in exports," says Peter Adrian. "Companies are hit from two sides: domestically, competitiveness is decreasing. High energy prices are a further burden for the companies. Additionally, there is increasing protectionism, which complicates international business."

However, it's not just international politics and trade conflicts that are hindering the economy: "Companies are particularly struggling with local certification and increased security requirements," adds Melanie Vogelbach. "This leads to additional bureaucracy and friction loss in cross-border trade." An increasing number of companies complain about losing track of complex legislations, bureaucratic and complicated customs regulations, and local content requirements.

Furthermore, four out of five companies (81 percent) see additional challenges from Germany and Europe in their cross-border business: 60 percent of them complain about bureaucratic hurdles and uncertainty in the implementation of regulations, such as the Carbon Border Adjustment Mechanism (CBAM) or the German Supply Chain Due Diligence Act. More than half (57 percent) have problems with the execution of their foreign business, such as long approval times from the Federal Office for Economic Affairs and Export Control (BAFA) or complex procedures in customs clearance.

This also contributes to the fact that German companies can currently benefit only little from the at least moderately growing global economy. They continue to assess their export expectations for the current year negatively. This is also reflected in the global business perspectives. 26 percent of companies anticipate a deterioration in foreign business this year, while only 13 percent expect an improvement. "Under the current circumstances, we will be fortunate if there is even a small increase in exports this year," says DIHK President Peter Adrian.

There is a glimmer of hope in the US business. Here, companies mostly expect an improvement in their business over the next twelve months. Negative outlooks dominate in all other world regions. This divergence between regions has rarely been so pronounced. After the US, Asia/Pacific (without China) and Canada are the two markets with the most expectations for growth in 2024.

In light of this concerning development, the DIHK urgently demands the reduction of trade barriers and more commitment to concluding trade agreements. "The bureaucratic hurdles in foreign trade must be addressed promptly, better today than tomorrow," urges Melanie Vogelbach. "The global environment is challenging enough. We don't need to further hinder ourselves with excessive bureaucracy."

The complete survey results are available for download here: https://www.dihk.de/resource/blob/115034/5c9defd9695502c9b62de2977f9a8e3e/going-international-2024-eng-data.pdf