Tom Fairless

Yes, that's right.

The French President Emmanuel Macron recently said that the trade balance with China is unsustainable.

And he raised the prospect of tariffs, of European tariffs against Chinese products.

The Germans have been more cautious.

And I think there is a kind of groundswell of concern that's coming, especially from businesses, from German businesses that are being hit.

directly.

The core of German industry is being threatened now by China because China has moved up the value chain.

Germany escaped the first China shock that sort of rattled the US economy because it produced higher end goods and it produced the machinery that China needed.

But now China doesn't need Germany so much anymore because it produces all the stuff itself.

The German China shock could be even more severe than the US China shock because for the US, it wasn't the core of the US economy.

It was furniture and toys.

But machinery and cars is really the heart of the German economy.

So German industry is really rattled and lobbyists are speaking out more and more for tariffs in Brussels.

I think some kind of deal, either on the currency or

that maybe if China agreed to allow the yuan to appreciate, or on some kind of tariffs against certain products, could buy time for European industries.

From the European perspective, there seems to be a growing sense that they're going to lose this battle, that for large parts of the world,

expensive German products will not be competitive anymore and that they have to climb the value chain.

They have to focus on really the highest end manufacturing goods and also probably refocus on the European market.

Probably markets like India and Brazil are maybe lost in future because China is just too dominant.

So some kind of agreement with China could buy time.