Germany faces triple threat from US tariff shock, trade expert warns
Germany faces a triple threat following US President Donald Trump's sweeping new global tariffs announcement, a trade expert warned on Thursday.
Lisandra Flach from the Munich-based ifo Institute said called the move - which included a blanket minimum 10% duty on all imports, and a 20% toll on goods from the European Union - a "bitter day for the global economy."
Germany could initially expect a 0.3% decline in gross domestic product (GDP), Flach said.
But the expert warned that Europe's largest economy, which is hugely dependent on exports of goods such as cars and chemicals, is likely to be further hit in three distinct ways by the new US policy.
First to suffer will be German exports to the US - the leading market for Germany's crucial automotive sector.
Secondly, the tariffs' massive impact on the Chinese economy - which faces US duties of 54% after Trump's announcement - will likely lead to a significant drop in German exports to Beijing.
And thirdly, German goods are likely to face massive competition from countries such as China that will be seeking new markets following their effective exclusion from the US.
"The crucial question is how other countries will react - not just to US tariffs, but to protectionism in general," said Flach. "In the worst-case scenario, an escalation could bring trade to a standstill."
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