Germany's Strategic Foreign Trade Vulnerabilities: An Analysis by Benjamin Jung and Matthias Fauth from the Chair of International Economics [20.07.26]
The current issue of Perspektiven der Wirtschaftspolitik (PWP) der Wirtschaftspolitik features our article on Germany’s Strategic Foreign Trade Vulnerabilities between China, the US, and Global Markets (in German: "Deutschlands strategische Außenhandelsrisiken im Spannungsfeld zwischen China, den Vereinigten Staaten und globalen Märkten", joint with Matthias Fauth). The article is part of the special issue "Geoeconomic Challenges and Their Implications for the European Union".
Image: Pixabay/geralt
The starting point is a theoretical consideration: international specialization yields substantial welfare gains but at the same time opens up geoeconomic vulnerabilities, in particular the threat of withholding critical intermediate products from sale. Such a threat becomes effective above all when affected imports are hard to substitute and concentrated on a few suppliers. We translate this logic into four measurable criteria and apply them to detailed 8-digit foreign trade data (2022–2024): high non-EU share, high source-country concentration, poor substitutability, and a high share of absorption (the total quantity of goods consumed in Germany from domestic production and imports).
