A new report from the Institute of the German Economy (IW) in Cologne has highlighted the significant economic toll that a potential trade war with the U.S. could have on Germany.
According to their calculations, Donald Trump’s proposed tariffs could cost Germany up to €200 billion over the next four years if the measures are maintained.
“For Germany, a 20% tariff is an economic catastrophe,” said Jürgen Matthes and Samina Sultan, the authors of the study.
The researchers predict that, by 2028, Germany’s GDP could be 1.5% lower than if these tariffs had not been imposed. However, the impact is not expected to be limited to Germany alone. The total economic damage to the European Union could reach approximately €750 billion, with a significant portion of the loss stemming from a decline in exports, particularly in the automobile sector.
The study suggests that the EU can no longer solely rely on negotiations to resolve the trade tensions. “Up until now, the EU has tried to sway Trump with offers — for example, on liquefied gas or arms supplies. Now it is time to show that the European Commission also has leverage,” the report concludes.
