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Trump's Tariff Threat: German Economy Faces 15 Billion Euro Hit
2 May
Summary
- German economy could lose nearly 15 billion euros output.
- US auto tariffs could reach 25% next week, up from 15%.
- Economists advise caution, citing Trump's history of withdrawn threats.
Germany's economy is projected to suffer a substantial output loss, potentially nearing 15 billion euros, as a result of U.S. President Donald Trump's announced tariff increase on automobiles and trucks originating from the European Union. The Kiel Institute for the World Economy (IfW) estimates these losses could escalate to approximately 30 billion euros in the long term.
President Trump declared on Friday that auto tariffs would be raised to 25% next week, a significant jump from the previously agreed-upon 15%. This action was reportedly taken because the EU had not complied with its trade agreement with Washington.
The IfW predicts that Germany's already modest growth rate would be severely impacted, with the institute currently forecasting 0.8% economic growth for the year. Other European economies with substantial automotive industries, including Italy, Slovakia, and Sweden, are also expected to experience considerable economic repercussions.
Advisors to the German finance minister advocate for a cautious stance regarding President Trump's actions. They suggest the EU should observe the situation, acknowledging that Trump has a history of retracting tariff threats. Furthermore, questions remain regarding the justification and legal basis for the latest tariff announcement, which some have characterized as impulsive.
