US, German Economies Face Slowdown Risks from Trump Tariffs

US President Donald Trump's threat to impose 30% tariffs on imports from the European Union could lead to a significant economic slowdown both in the US and Europe, with Germany potentially losing about a quarter of a percentage point in growth this year and next. The IMK institute projects zero GDP growth for Germany this year and 1.2% next year, while the US economy could experience a steeper slowdown, dropping 0.7 percentage points primarily due to inflation and reduced consumer spending. German officials, including Finance Minister Lars Klingbeil, warn that Trump's tariffs would harm both economies, calling for a fair trade deal and preparing for countermeasures if negotiations fail. The Bundesbank highlights considerable risks for the German economy, expecting stagnation in the second quarter and warning that the tariffs would pose a significant downside risk, potentially causing Germany to face a third consecutive year without growth—an unprecedented situation. While German industry shows weakness and consumers are cautious, the labor market remains stable, and public investment initiatives are seen as potential mitigators of the economic risks. The EU has prepared countermeasures targeting US goods in response, signaling a tense trade standoff that could slow global economic growth by 0.5 percentage points this year.