Trump's plan to impose general import tariffs of 10-20% threatens to significantly worsen the economic situation in European Union countries, particularly in Germany, which is already struggling with weak growth rates.
According to Reuters, experts warn that if the U.S. initiates a new trade war with Europe, the consequences for Germany could be disastrous. A new report from the German economic institute IW predicts a 1.3% decline in the Eurozone's GDP and a 1.5% drop in Germany's GDP by 2028 if the U.S. imposes a 20% tariff on European goods and the EU retaliates with similar measures.
The industrial sector in Germany is particularly affected, already facing a decline in export demand. Analysts point to a projected 32% decrease in exports of German cars and a 35% drop in pharmaceutical products if U.S. protectionist policies intensify.
The International Monetary Fund warns that Germany risks becoming the only G7 country with zero economic growth for two consecutive years, as its main trading partner, the U.S., could restrict access to its markets. Jürgen Mattes, head of international economic policy at IW, notes that this situation exacerbates overall uncertainty about the economy's future: investors are shying away from investments, and consumers are cutting back on spending due to fears of future risks.
In light of these forecasts, Germany is on the brink of a new economic downturn. Economy Minister Robert Habeck emphasized that the German economy heavily relies on exports, and in the event of a trade conflict with the U.S., the country's economic model could lose one of its most crucial pillars.
Source: reuters.