By Sama Marwan,
The German Central Bank has once again warned of severe damage to the German economy if former U.S. President Donald Trump follows through on his threats to impose tariffs during his election campaign.
Joachim Nagel, President of the German Central Bank, stated in Frankfurt that Trump’s isolationist approach would particularly impact Germany, a major exporting nation, and bring significant risks to economic growth.
According to model calculations, Germany’s economic output in 2027 could be around 1.5 percentage points lower than previous forecasts. Nagel also noted that inflation could worsen, though the extent of this impact remains highly uncertain, emphasizing that this is a hypothetical scenario.
Trump’s new tariffs are considered the biggest threat to the German economy, which has already contracted for two consecutive years. The federal government and leading economists predict only minimal growth at best this year. Last November, Nagel warned that Trump’s tariff measures could cost Germany 1% of its GDP. The United States is Germany’s most important trading partner.
The German Central Bank bases its calculations on Trump’s campaign announcements, which indicate that tariffs on Chinese imports will rise to 60%, while products from Germany and other countries will be subject to a 10% tariff rate.
So far, the U.S. government has imposed an additional 10% tariff on Chinese goods, announced a 25% tariff on aluminum and steel for March, and plans to apply the same tariff to Mexico and Canada. Additionally, Trump recently signed an executive order increasing tariffs on any goods for which the U.S. currently imposes lower rates than its trading partners. Further tariff announcements have been made, particularly concerning cars, computer chips, and pharmaceuticals.
In addition to the U.S. tariff increases, the German Central Bank has considered other announced measures, such as tax cuts and large-scale deportations of migrants in the U.S. It has also assumed that trading partners will respond with retaliatory tariffs, as the European Union has already declared.
