German Central Bank Chief: US Tariffs Would Eat Up German Growth in 2025

The Bundebank expects growth of 0.7% in Germany in 2026 but this could be eaten up if US tariffs of 30% threatened by President Donald Trump were implemented, the central bank’s President Joachim Nagel told Reuters in an interview.

“If tariffs materialize in August, a recession in Germany in 2025 cannot be ruled out,” Nagel said in Durban, South Africa, where the meeting of G20 finance chiefs is taking place on Thursday and Friday.

The 30% tariff on European goods threatened by Trump would, if implemented, be a game-changer for Europe, wiping out whole chunks of transatlantic commerce and forcing a rethink of its export-led economic model.

“The outlook for the German economy has just improved, especially due to the fiscal program that has been announced and is now being implemented by the German federal government, which also sets the right accents: investments in infrastructure, in future technologies,” Nagel said. “But this uncertainty could significantly weaken a positive outlook.”

Also, German Finance Minister Klingbeil told Reuters on Thursday that the European Union should find solutions to its finances without using common borrowing.

Klingbeil said the EU had joint debt in the last few years, but that was in a crisis situation during the COVID pandemic, he said in an interview on the sidelines of a G20 meeting in Durban, South Africa.

“Overall, we need to resolve the finances of the EU differently than through a policy of joint debt,” he said.

“Fortunately, we are not in such a crisis right now,” he added.