EU Could Lose $1.25 Trillion Due to Trump Tariffs, Study Finds
Germany’s economy alone could slump by 1. This statement reflects the potential downturn that industry experts are projecting for the country's financial landscape. The implications of this decline could significantly impact various sectors within Germany, as well as its trading partners. Economic analysts are closely monitoring trends and indicators that may affect Germany's stability, pointing to challenges that could arise in the near future.
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Germany’s economy may contract by 1.6% annually by 2028, as noted by IW.
A study from the German Economic Institute indicates that a trade war with the US could result in losses of up to €1.1 trillion for the EU over the next four years if Donald Trump follows through on his proposed tariffs.
Earlier this month, the Trump administration unveiled plans for a broad 20% tariff on all EU products and a 25% tariff on car imports, aiming to address what Washington views as a significant trade deficit with the bloc. In response, Brussels was preparing to enact 25% retaliatory tariffs on US goods before Trump announced a 90-day hiatus on most tariffs to facilitate negotiations.
Should an agreement not be reached and US tariffs be implemented, the study published on Thursday estimates that the EU’s total costs could range from €780 billion to €1.1 trillion from 2025 to 2028, depending on various scenarios.
The institute forecasts that during this same timeframe, Germany’s GDP could potentially decline by 1.2% annually under the tariffs. If trading partners implement similar retaliatory measures, the costs for Germany could escalate to 1.6%.
Germany's economy, already confronting significant challenges, is projected to grow by merely 0.1% in 2025 following two years of contraction. The IW anticipates a total loss in economic output of €180 billion by 2028 for Germany, primarily attributed to reduced exports and declining investment.
The US maintained its position as Germany’s largest trading partner in 2024, with bilateral trade reaching €253 billion. Experts caution that a trade conflict could profoundly affect vital sectors, including automotive and pharmaceuticals.
The IW emphasized that while the tariffs are currently on hold for 90 days, the prevailing uncertainty continues to disrupt global investment planning.
European Commission President Ursula von der Leyen previously suggested a “zero-for-zero” tariff agreement to eliminate industrial goods duties between the EU and the US. However, Trump dismissed the proposal as inadequate, demanding that the EU commits to purchasing $350 billion worth of American energy in exchange for tariff relief. He has criticized the EU’s trade policies, asserting that the bloc is “very bad to us” and using the US trade deficit as grounds for his position.
Trade discussions took place earlier this week between officials from Washington and Brussels, but they reportedly made little progress in bridging their differences. US representatives indicated that most tariffs on EU goods are likely to remain in effect, as reported by Bloomberg.
Mathilde Moreau for TROIB News
A study from the German Economic Institute indicates that a trade war with the US could result in losses of up to €1.1 trillion for the EU over the next four years if Donald Trump follows through on his proposed tariffs.
Earlier this month, the Trump administration unveiled plans for a broad 20% tariff on all EU products and a 25% tariff on car imports, aiming to address what Washington views as a significant trade deficit with the bloc. In response, Brussels was preparing to enact 25% retaliatory tariffs on US goods before Trump announced a 90-day hiatus on most tariffs to facilitate negotiations.
Should an agreement not be reached and US tariffs be implemented, the study published on Thursday estimates that the EU’s total costs could range from €780 billion to €1.1 trillion from 2025 to 2028, depending on various scenarios.
The institute forecasts that during this same timeframe, Germany’s GDP could potentially decline by 1.2% annually under the tariffs. If trading partners implement similar retaliatory measures, the costs for Germany could escalate to 1.6%.
Germany's economy, already confronting significant challenges, is projected to grow by merely 0.1% in 2025 following two years of contraction. The IW anticipates a total loss in economic output of €180 billion by 2028 for Germany, primarily attributed to reduced exports and declining investment.
The US maintained its position as Germany’s largest trading partner in 2024, with bilateral trade reaching €253 billion. Experts caution that a trade conflict could profoundly affect vital sectors, including automotive and pharmaceuticals.
The IW emphasized that while the tariffs are currently on hold for 90 days, the prevailing uncertainty continues to disrupt global investment planning.
European Commission President Ursula von der Leyen previously suggested a “zero-for-zero” tariff agreement to eliminate industrial goods duties between the EU and the US. However, Trump dismissed the proposal as inadequate, demanding that the EU commits to purchasing $350 billion worth of American energy in exchange for tariff relief. He has criticized the EU’s trade policies, asserting that the bloc is “very bad to us” and using the US trade deficit as grounds for his position.
Trade discussions took place earlier this week between officials from Washington and Brussels, but they reportedly made little progress in bridging their differences. US representatives indicated that most tariffs on EU goods are likely to remain in effect, as reported by Bloomberg.
Mathilde Moreau for TROIB News
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