Germany sees zero progress in 2025, blames Trump tariffs – DW – 04/24/2025 | EUROtoday

The German authorities minimize its financial progress forecast to zero citing the influence of US President Donald Trump’s commerce insurance policies .

“There is above all one reason for this, namely Donald Trump’s trade policy and the effects of the trade policy on Germany,” outgoing Economy Minister Robert Habeck stated.

He stated there was little hope of reduction for Europe’s largest financial system following two years of recession in 2023 and 2024.

The German financial system contracted by 0.3% in 2023 and by 0.2% in 2024.

How do the Trump tariffs have an effect on the German financial system?

The European Union (EU) was negotiating with Washington to keep away from an extra 20% proposed US tariffs on items from the bloc.

The United States is Germany’s largest buying and selling companion and Habeck stated Trump’s tariffs are “hitting the German economy harder than other nations.”

“The US trade policy of threatening and imposing tariffs has a direct impact on the German economy, which is very export-oriented,” Habeck stated.

The US tariffs, that includes a blanket 10% responsibility on all imports and 25% levies on vehicles, aluminum, and metal, are set to hit Germany’s main export-based sectors like automotive and pharmaceutical industries arduous.

It has additionally been coping with more and more fierce Chinese competitors in key industries equivalent to vehicles and equipment.

“Our big trade partners, China and the USA, and our neighbor, Russia, are causing us problems,” Habeck stated.

Bundesbank warns of chance of ‘slight recession’

However, Habeck and the federal government’s forecast is extra optimistic than that of Germany’s central financial institution.

Speaking on the sidelines of the Spring Meetings of the World Bank Group and the International Monetary Fund in Washington, Bundesbank President Joachim Nagel stated the best-case state of affairs is stagnation.

He couldn’t rule out “a slight recession for 2025,” including that the interval of uncertainty is just not over.

Germany’s financial system has been mired in an financial disaster in recent times, with inflation hovering following the measures take to comprise the coronavirus pandemic, adopted by the Russian invasion of Ukraine.

Habeck voiced hope a brand new spending bundle price many a whole bunch of billions of euros might assist revive the financial system beneath conservative Friedrich Merz, who is predicted to take energy in early May.

Edited by: Rana Taha