Poor Germany! Once again, it is being warned of economic troubles due to its trade standoff with the US.
According to Joachim Nagel, president of the Bundesbank, Germany is particularly vulnerable to US trade tariffs. He believes these tariffs have long-term negative effects. They may suppress economic growth for years, holding back the German economy, which has already been in decline for two consecutive years. "Economic output in 2027 would be almost 1.5 percentage points lower than forecast," Nagel emphasized.
Right now, Germany, Europe's largest economy, is stuck in a prolonged industrial recession. The fact is that subsidized Chinese manufacturing is pushing German products out of the market. Soaring energy prices are also hitting competitiveness hard, thus adding fuel to the fire.
In this situation, the Bundesbank president’s pessimism is understandable. "Our strong export orientation makes us particularly vulnerable," Nagel points out. The Bundesbank ran projections based on Trump’s tariff threats and concluded that Germany would take a serious hit. However, the US would not escape unscathed either, he added. America is setting itself up for a blow that could cancel out any potential benefits of trade barriers.
According to Bundesbank forecasts, Germany’s economy will grow by only 0.2% in 2025 and 0.8% the following year. Experts attribute these weak figures to US tariffs. As a result, with economic output already projected to be 1.5% below expectations, Germany could face significant economic contraction over the next three years.
