Klaus F. Zimmermann

Article by Klaus F. Zimmermann published in China Daily on April 30, 2025, p. 9. See Online and as PDF.

The global economy has endured major turbulence due to the United States’ aggressive economic policy of imposing high punitive tariffs on imports to extract maximum economic benefits. True, markets have shown resilience, but only up to a certain point.

The volatility caused by the unexpected imposition of tariffs, sudden rollbacks, and communication strategies largely conducted via social media has created deep uncertainty for investors, corporations and global supply chains.

The very strong negative reactions of international stock markets played a key role in forcing the moderation of the US’ most extreme tariff proposals. The fear of financial instability and backlash from investors contributed to the softening of positions and pushed the US administration toward partial rollbacks and renewed talks.

The US’ trade strategy lacks consistency and economic rationale. High tariffs were presented as a means of protecting domestic industries, relocating jobs and forcing trade concessions. But these measures are expected to backfire in key areas: consumer prices in the US are expected to rise, household purchasing power to weaken, and investment to slow down.

Worse, supply chains that took decades to build are feared to have been disrupted, with the effects predicted to shift global trade routes and investment flows. The broader goals of the policy-namely, reducing dependence on foreign manufacturing and bringing jobs back to the US — are in conflict with the mechanisms used to pursue them. Trade wars undermine global specialization and the efficiency gains made possible by comparative advantage.

Economic theory dating as far back as to Adam Smith and David Ricardo teaches us that international trade enables countries to allocate resources where they are most productive. Even if one country could theoretically produce all goods more efficiently, mutual gains may still arise from specialization and trade. Today’s supply chains reflect this logic. For instance, a single Apple computer integrates components and expertise from across the globe, particularly from China.

Instead of strengthening the US economy, the erratic use of tariffs as a policy tool creates distortions. The belief that tariffs can finance government budgets, stimulate domestic investment and accelerate growth overlooks both economic fundamentals and global interdependencies. What will occur instead are inflationary pressure, reduced consumer confidence, and a more fragile economic outlook.

At the core of Washington’s strategy is an outdated model of economic nationalism combined with a view of geopolitics that treats trading partners as competitors and global leadership as a zero-sum game. The idea that the US can run the global economy like a monopolistic corporation — extracting tributes or concessions in exchange for market access or security guarantees — ignores the complexity of global governance. The US does enjoy certain advantages, such as issuing the world’s reserve currency and having unmatched military power, but that doesn’t mean it should act like a global hegemon.

China is the main target of the US tariff war. But it cannot afford to appear weak in the face of the public confrontation. Direct concessions will damage China’s image, both domestically and internationally. The trade conflict has already escalated to the point where bilateral tariffs are well over 100 percent and, if sustained, trade flows between the two countries will likely come to a virtual standstill.

Beyond tariffs, China holds other strategic levers. As one of the largest holders of US Treasury securities, it could theoretically inflict financial pain by selling them in large volumes, although such a move would also hurt China’s own interests.

Strategically, China may intend to rebalance its economic relationships. Investing in the European Union is one potential path, particularly in response to the US’ export restrictions. Germany, as the economic heart of the EU, offers a possible destination for Chinese capital given its new government’s intention to debt-finance huge infrastructure investments, in case the country (and the EU) moderates its recent de-risking strategy toward China.

This brings regional partnerships, such as the EU-China trade partnership, into sharper focus. These partnerships can serve as stabilizers in an increasingly fractured global trade environment. While the US-China rivalry dominates headlines, the EU has positioned itself as a balancing force, leveraging its commitment to multilateralism and rules-based trade.

By pursuing frameworks currently on hold, such as the Comprehensive Agreement on Investment, and working toward pragmatic compromises — such as minimum pricing on Chinese-made electric vehicles instead of outright tariffs — the EU may demonstrate that collaboration, not confrontation, is still possible. China has already implemented parts of the CAI such as easing financial sector restrictions and addressing forced technology transfers and environmental commitments. Unresolved issues, mainly concerning State-owned enterprises and subsidy transparency, are still crucial. If enforced, they could drive long-needed structural reforms in China, while also supporting free trade.

Considering these factors, what steps can be taken to end the global trade conflict?

A possible solution lies in rebuilding multilateral cooperation. Unilateralism and tariff wars fuel only uncertainty and fragmentation. Hence, countries should return to the negotiating table, not just to resolve specific disputes, but also to renew trust in international institutions and rules-based trade.

Ending the trade war also requires recognizing that global economic power is no longer unipolar. We must accept a world where leadership is earned through cooperation, not coercion. Trading partners cannot be coerced into agreement, and a sustainable global trade order depends on balanced relationships, where mutual benefit, not dominance, guides policy.

Tariffs should be replaced by clear, enforceable agreements that promote fair trade practices while preserving the benefits of openness, and mechanisms to address labor rights, environmental concerns, and intellectual property must be modernized.

The alternative to cooperation is long-term economic fragmentation — slower growth, higher prices and diminished global influence for all. With the right approach, the current crisis can be transformed into an opportunity to reinvigorate global trade and provide a course away from confrontation and toward sustainable, inclusive prosperity.

The author is a professor at the Free University of Berlin and president of the Global Labor Organization, a Germany-based worldwide network of researchers investigating the path of globalization. The views don’t necessarily reflect those of China Daily.

February 27, 2025. Loyalty to US vs pursuit of strategic autonomy: Where will Europe head? Published in Global Times, February 27, 2025, p. 6. LINK. With statement of Klaus F. Zimmermann. PDF of article.

Editor’s Note:

It is evident that Europe’s relationship with the US is undergoing a significant transformation. The continent now faces the challenge of navigating its alliance with a US that is once again prioritizing an “America First” approach while exploring possibilities and ways to strengthen “strategic autonomy.” How will the transatlantic relationship evolve and what are Europe’s choices in seeking “strategic autonomy”? The Global Times consulted four European scholars to gather their perspectives.

Klaus F. Zimmermann, a professor at the Free University of Berlin and the president of Global Labor Organization

The transatlantic relationship between the US and Europe is facing significant strain due to shifts in US geopolitical priorities, global positioning and policymaking style. The new US administration’s approach, which emphasizes “America First,” is perceived as both isolationist and assertively expansionist. Some of the early actions from the new administration have caused international concern. Additionally, US demands for exclusive access to Ukraine’s natural resources and undiplomatic comments about European political developments, particularly regarding Germany, have exacerbated tensions.

This shift has led to major disagreements between the US and Europe over economic policy, climate change, democratic values and how to deal with the Ukraine conflict. Europe’s internal divisions and the unpredictability of American actions are making it difficult to reach a new balance in transatlantic relations. One particularly contentious issue is the tariffs on European goods imposed by the US administration. The president views tariffs as essential to national prosperity and a tool for international influence. While this economic strategy is widely criticized, it poses a direct threat to Europe’s trade-dependent economies and also affects China. In response, Europe is expected to take countermeasures. The debate largely overlooks the fact that while the US has a trade deficit with Europe in goods, Europe has a trade deficit with the US in services.

With the US and Russia moving closer, doubts are growing about the US commitment to NATO and there are fears that an unstable cease-fire could be imposed on Ukraine. Europe will therefore soon be massively building up its military in order to take the necessary independent position.

As a result, Europe is likely to pursue greater independence in economic, military and foreign policy matters. The continent is still the largest internal market in the world after China. Strengthening China-Europe ties may again become a strategic priority as Europe seeks to hedge long-term risks. Discussions about decoupling from China are expected to dissipate, presenting China with an opportunity to enhance its standing and influence within Europe.

See for the other 3 views LINK.

The “immigration question” was a central topic in Germany’s 2025 federal election campaign. On February 23, 2025, the parliament was re-elected. The country is now confronted with many promises, some of which are based on misjudgments. Forming a government and defining its policy objectives will take some time. How do we get out of this dead end? Can Germany do it alone? Every new government should “simply do a good job, focus on what works”! What are the promising approaches?

• Refrain from making unrealistic promises.
• Allow flexible international labor and training migration.
• Ensure a consistent and significant acceleration of asylum procedures and grant work permits to all asylum seekers as early as possible.
• Stop illegal asylum seekers at Europe’s external borders and through agreements with key sending or transit countries.
• Those who have integrated economically and socially must be allowed to stay.
• Europe is needed.

Grandiose promises and political disenchantment

Migration policy is always a fertile ground for grandiose promises. Statements like “the borders will be closed,” “all refugees will be sent home,” or “all new asylum cases will be stopped” are made. However, a sober fact-check reveals that such reactions are reckless, premature, or even harmful to one’s own interests. The short-term gut feeling of an apparent solution eventually gives way to the realization that, in the long run, nothing has actually changed.

The inevitable result is frustration and disenchantment with politics. Over the years, German citizens have watched this political theater unfold over and over again. The discussions about the reactions of Germans to the recent political changes in Syria, for example, or about the context of the terrible acts of violence committed by people with a refugee background sadly provide ample examples. Policymakers should not rely on voters’ short memory.

The immigration question is complex, as humanitarian concerns intertwine with economic interests. Without a compass, one quickly ends up in a dead end. Those who need skilled workers cannot afford to alienate entire ethnic groups. Those who indiscriminately deport people risk their own prosperity, as economic consequences such as labor shortages and rising prices inevitably follow large-scale deportations. A nation that betrays its values and interests will not be able to withstand global challenges in the long run.

Thus, the desire to pursue the right policies without being distracted is certainly a sensible approach. Provided it is the right policy and not just a populist reflex designed to oust unwelcome political competition and secure the next election. Good policy provides lasting solutions. Politics driven by rhetoric rather than reason ultimately leads only to voter dissatisfaction.

The challenges of migration policy

Germany needs workers—both skilled and unskilled—not only in the healthcare sector, the hotel and hospitality industry, and technical professions. However, our country is not considered particularly attractive, not even for students or apprentices at our tuition-free universities or in our highly praised vocational training system. But skilled workers who are trained domestically and stay permanently are not only adequately qualified but have also established themselves through language skills and cultural integration.

The formal obstacles to entering Germany as a migrant worker have been significantly reduced over the years. German migration policy has contributed to this. Nevertheless, there are still not enough people entering the German labor market. This has consequences for growth and prosperity. Germany’s poor image as a country of immigration is partly responsible for this, as is the regular behavior of migrant workers, which involves voluntary emigration as well as immigration. The majority of labor market-oriented immigrants leave Germany again. Integration policies must be implemented to ensure that they stay. Because what is at stake is the prosperity and welfare of the entire population living in Germany.

Wrong signals in refugee policy can undermine these efforts. The broader societal debate on immigration affects all immigrant groups. It is not surprising that refugees generally integrate into the labor market more slowly. However, they do integrate—especially when access to the labor market is granted quickly after applying for asylum and when qualification and integration programs are available. In recent years, aside from Ukraine, Syria has been the most significant country of origin for refugees coming to Germany.

The reality is: Without immigration, Germany (and Europe) will age and shrink, while the working-age population in Africa and Asia is set to increase dramatically over the coming decades. At the same time, conflicts and tensions in these regions will also escalate. Given the enormous labor force growth in Africa and Asia, Europe has to expect significantly greater migration pressures—both economic and refugee-driven—over the forthcoming decades.

New priorities in migration policy

Yes, a radical shift in migration policy is necessary. However, the current debate has maneuvered itself into a dead end. Germany cannot realistically protect its external borders against illegal immigration permanently. Asylum seekers are registered—meaning they are irregular, but they are not illegal. The real threat arises when migrants go underground illegally.

Nothing works without Europe: Those who advocate for permanent border controls within Schengen states risk destroying the core of the crucial European integration. Europe must be made migration-proof for the future. European solidarity should focus on establishing and expanding European immigration centers at the EU’s external borders, where asylum procedures should be concluded promptly.

However, Germany will continue to call for a fair distribution of recognized refugees among the member states. To this end, the capacities for the necessary efforts to teach language skills, European values and a rapid integration into the labor market must be made available on a permanent basis.

To meet labor demands essential for economic prosperity and to effectively control illegal migration pressure, an efficient, hybrid agreement system is needed with key sending and transit countries in the Mediterranean region, Asia, and Africa. This involves the contractual safeguarding of a circular labor migration system as well as the prevention of illegal migration and the readmission of rejected asylum seekers. Germany will also need European cooperation to implement such a system successfully.

Klaus F. Zimmermann

REFERENCES

Featured image above: Julie Ricard on Unsplash – rTXKkhHgoVM

• Zimmermann, Klaus F. (2025). Migrationspolitik aus der Sackgasse führen. Opinion Piece in Wirtschaftliche Freiheit. Das ordnungspolitische Journal published on 29 January 2025. LINK
• Zimmermann, Klaus F. (2017). Refugee and Migrant Labor Market Integration: Europe in Need of a New Policy Agenda in: Bauböck, R. and Tripkovic, M.,  The Integration of Migrants and Refugees.  An EUI Forum on Migration, Citizenship and Demography, European University Institute, Robert Schuman Centre for Advanced Studies, Florence 2017, pp. 88 – 100.

FURTHER REFERENCES:

• Circular Migration 
• Ukraine, EaP Countries and the EU
• Refugees