Bundesbank: U.S. Tariff Policies Could Severely Impact German Economy

The President of the German Bundesbank, Joachim Nagel, recently warned that potential U.S. protectionist trade policies pose a significant risk to Germanys export-driven economic growth.

According to the Bundesbanks economic models, if former U.S. President Donald Trumps proposed tariff policies are implemented, Germanys economic growth rate in 2027 could be nearly 1.5 percentage points lower than previously forecast. Additionally, such tariffs could contribute to rising inflation.

The Bundesbank further noted that a wave of tariffs would not only have severe negative consequences for Germany but also impact the U.S. economy itself. Speaking on February 17, Nagel emphasized that U.S. consumers would see reduced purchasing power, and businesses would face higher production costs, with these negative effects far outweighing any competitive advantage tariffs might bring. He also warned that U.S. inflation would rise significantly as a result.

Contrary to the Trump administrations expectations, Nagel suggested that these tariff measures could ultimately be detrimental to the U.S. economy. In response to the looming trade restrictions, Germany and other key trading partners may introduce countermeasures. The European Union has already stated that it will impose retaliatory tariffs if necessary.