BERLIN: U.S. tariffs of 30% on imports from the EU, planned by President Donald Trump, could cost the German economy about a quarter of a percentage point in growth this year and next compared with current forecasts, the IMK institute said on Wednesday.
Trump has said he will impose 30% tariffs on imports from the EU from August 1 if there is no progress on trade talks.
That would mean zero growth this year and 1.2% growth next year in Germany, Europe’s biggest economy, according to the IMK institute.
This compares with its previous forecast for a recovery from the fourth quarter and average growth of 0.2% for 2025, rising to 1.5% next year, driven by a planned boost in public investment and defence spending.
“A rapid implementation of the plannd public investment offensive could significantly reduce the economic risks in Germany,” said IMK.
“Growth losses in the U.S. would be far greater than in Germany,” it said, adding the U.S. was until last year the most important export market for Germany, with an almost 10% share.
More than half of Germany’s export-reliant engineering companies do not expect nominal sales growth this year, with 30% even expecting a decline, due to simmering trade tensions, the VDMA industry association found in a separate survey.
Despite the trade disputes, nearly one in three firms rate current sales opportunities in North America as favourable, found the survey of 963 firms conducted at the end of June.
“All in all, the current year is likely to be mixed for the majority of companies, with sales growth not returning until 2026,” said VDMA chief economist Johannes Gernandt.
Nearly 60% of companies see nominal growth as possible next year, said VDMA.
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