Germany may suffer from trade war with US if Trump returns to power

Germany's powerful industrial base, which used to be the envy of many countries, may be particularly vulnerable. Former US President Donald Trump has announced plans to impose import tariffs of 10 to 20% and up to 60% and higher on goods from China, which, in his opinion, should help boost American production.

According to a study by the German economic institute IW, if the Trump administration imposes 20% tariffs on EU goods and Europe retaliates with similar measures, the euro zone's GDP could shrink by 1.3% in 2027-2028, and the German economy will suffer even more, falling by 1.5%.

At the same time, the US will also feel the impact of tariffs: in the first two years, GDP will decline by 1.3% with 10% tariffs and 1.5% with 20% tariffs. However, the US economy may stabilize in the future due to an improvement in the trade balance, as imports will decline more than exports.

Germany, Europe's largest economy, is already experiencing a recession. According to the International Monetary Fund, it will be the only G7 country to fail to grow for two consecutive years. A trade war with the United States, Germany's largest trading partner, could deal a serious blow to the country's output.

Germany's exports are expected to decline by 0.3% this year due to lower global demand and geopolitical tensions. If tariffs of 20% are imposed, German industry could be hit even harder, with a one percentage point decline in production in the first two years, according to a study by the Hans Böckler Foundation.

Exports of automobiles and pharmaceuticals would be particularly vulnerable: according to the Ifo Institute, exports of automobiles could drop by 32% and pharmaceuticals by 35%. These losses will exacerbate the already existing downturn in German industry, which continues to face difficulties.

According to experts, even lower tariffs, around 10%, could have negative consequences for the German economy, creating an atmosphere of uncertainty and reduced investment, which also affects consumer activity.

Trump's scandalous statements

Former White House Chief of Staff John Kelly said that Donald Trump has repeatedly expressed admiration for dictators, including Nazi Germany's leader Adolf Hitler. According to Kelly, Trump's behavior meets the definition of fascism.

Trump's spokesperson denied the allegations, calling them absolutely false.

In May, Trump posted a video on social media where he mentioned a “united Reich” as a possible system of government if he wins the election, which drew criticism from President Joe Biden and his team.