Trump’s tariff plans could cut German GDP by 1% – Bundesbank Chief

Bundesbank President Joachim Nagel cautioned that potential US trade tariffs under President-elect Donald Trump could push Germany’s economy into recession, warning they could slash economic output by 1 per cent.

“That’s very painful when you consider our economy won’t grow at all this year and is expected to grow less than 1 per cent next year,” Nagel told Die Zeit. Trump’s proposed 20 per cent tariffs on imports, following his recent election victory, have raised concerns across Europe about a global economic slowdown.

Bank of France Governor François Villeroy de Galhau echoed these worries, stating that Trump’s win “raises risks for the global economy,” while Finland’s central bank chief Olli Rehn warned of medium-to-long-term impacts.

Germany faces a challenging economic landscape, with weak exports and a struggling manufacturing sector compounded by uncertainties from the upcoming snap election.

Nagel added that, despite easing inflation, the European Central Bank must maintain a cautious approach with interest rates as wage-driven price pressures remain significant.