Trump’s Tariffs Threaten to Cut German Exports to U.S.

(MENAFN) A new analysis from the ifo Institute, a prominent German think tank, warns that sweeping tariffs proposed by U.S. President Donald Trump could slash Germany’s exports to the United States by a staggering 38.5%.

The report outlines a potential 2.8% contraction in Germany’s industrial output should the impasse in trade negotiations between the U.S. and European Union collapse and wide-ranging U.S. duties take effect targeting both Germany and the broader EU.

If these tariffs are enforced, not only would exports to the U.S. nosedive, but German exports to China could also drop by 2.8%, the study notes.

Key economic sectors in Germany such as automotive and pharmaceuticals are likely to bear the brunt. The automotive industry stands to lose up to 6% of its value-added, while the pharmaceutical sector could see losses approaching 9%.

Conversely, some sectors could benefit modestly from the trade shifts. The services and agriculture industries are projected to experience a minor boost of 0.4%.

These projections are anchored in the potential reinstatement of tariffs that were temporarily suspended in April. A 90-day grace period for negotiations expires on July 9, after which 50% tariffs on EU exports to the U.S. are scheduled to take effect.

The ifo Institute based its forecasts on anticipated U.S. levies—ranging from 25% on steel, aluminum, vehicles, auto components, pharmaceuticals, and electronics—without factoring in any retaliatory duties the EU might impose in response.

In 2024, the U.S. retained its status as Germany’s top trade partner, with bilateral trade exceeding €250 billion ($290 billion). American imports of German products amounted to $186.2 billion, representing a 2.2% year-over-year increase and accounting for 10.35% of Germany’s total export value.

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