costs amounting to €1, 300. 7 it ’ s also encouraging to see that the united states, mexico and canada have agreed on an updated free trade agreement. but the most important thing here is to preserve the rule - based multilateral trading system overall. this also means that existing rules have to be upheld. unfair trading practices such as dumping in the steel industry cannot be tolerated. the rules also have to be enhanced. many parties are now pushing for better protection of 5 / 8 bis central bankers'speeches intellectual property rights. just recently, 13 partners – among them the eu – signed a communique with the intention of reforming the world trade organization and making it more sustainable. on the whole, it seems to me that the threat of an all - encompassing global trade war has diminished, if anything, of late. having said that, the measures already adopted in the trade dispute between the united states and china are certainly likely to have macroeconomic repercussions. it is chiefly the two main players that can expect to sustain losses. according to model - based analyses performed by the bundesbank, economic output could be ½ per cent lower in both the united states and china over the medium term compared with potential developments in the absence of the trade dispute. other economies would also tend to be harmed, albeit to a lesser extent. the euro area and germany would suffer only a little. but nor should germany assume that it will benefit from the spat while remaining unscathed itself. in total, the punitive tariffs are likely to dampen global trade by just under 1 per cent after a certain interval. 7 challenges of globalisation and technological advances from an economic perspective, it ’ s clear that free trade gives a long - term boost to general prosperity. yet a shift is under way in employment prospects and also relative wages. globalisation has its winners and losers. studies show, for instance, that china ’ s integration into the global economy, in particular, led to notable job losses in manufacturing in the united states. more new jobs were probably created – but in other sectors and often in completely different locations. local labour markets seem to have adapted only slowly, and the lifetime income of workers who lost their jobs declined considerably. 8 for germany, on the other hand, globalisation created major opportunities to export to eastern europe and china. 9 in this way, it helped germany to retain manufacturing jobs – although this is also in net terms. equally, technological progress has its winners and losers

german fdi, the united states account for a substantial 15 per cent. when we view the economic ties between the united states and germany from both angles, we can see just how close, and how important, the economic relations between the two countries are. conclusions are more difficult to reach when economic relations between the two countries are expressed in terms of bilateral trade and current account balances, for example. 5 bilateral balances reveal little ladies and gentlemen, if the united states posts an overall deficit in its trade balance while germany generally posts a surplus, we expect to see this reflected in bilateral trade as well. a bundesbank study shows that the deficit in the united states ’ bilateral trade in goods correlates to the overall trade balance of its partner countries. the greater the overall balance of the partner country, the greater the us bilateral deficit. the balance of german - us trade in goods does not deviate noticeably from this empirical regularity. 2 having said that, bilateral balances generally are not very meaningful because they disregard relations with third countries. many us enterprises, for instance, have chosen to do business from the netherlands as a way to cover the european market. thus, it makes sense to consider the eu as a whole as a partner of the united states. trade expert gabriel felbermayr rightly pointed out that the united states actually has a current account surplus with the eu : income from services and primary income more than compensate for the trade in goods deficit. and ultimately, current account balances are the result of all savings and investment decisions in an economy. a distortion of the market or competition cannot be directly identified from these balances. what's more, current account balances can only by steered by policy to a limited extent. and the notion of reducing germany ’ s current account surplus so as to deplete the us deficit is unfeasible simply on the basis of size. the us economy is over five times as large as the german economy. in addition, increased demand in germany would have knock - on effects on other trading partners. greater demand for imports in germany would primarily benefit our neighbours, such as austria, the czech republic, the netherlands and poland. 3 to reduce the us current account deficit, it would make more sense to influence savings and investment decisions in the united states. as i ’ ve already indicated, a good starting point would be a change of direction in us fiscal policy, shifting away from its expansionary track. 4 / 8 bis