Bundesbank Warns US Tariffs Threaten Germany's Economy

Germany's economy is at significant risk due to potential U.S. trade tariffs, with Bundesbank President Joachim Nagel warning that the export-oriented nation could see a 1.5% drop in economic output by 2027. Nagel emphasized that Germany's reliance on exports makes it particularly vulnerable to falling foreign demand, exacerbated by the impact of subsidized Chinese products and soaring domestic energy costs. Despite expectations for modest growth this year and in 2026, the looming tariffs could lead to further economic contraction. He noted that the U.S. would also suffer negative consequences, including loss of purchasing power and increased costs, countering claims of benefits for American industry. The potential for retaliatory tariffs from trading partners adds to the uncertainty facing the German economy. Overall, the Bundesbank's outlook paints a concerning picture for both Germany and the U.S. amid escalating trade tensions.