U.S. tariffs could cost Germany 290 Bln Euros: Report

BERLIN: US tariffs could slash Germany's economic output by as much as 290 billion euros (US$330 billion) over four years, the German Economic Institute (IW) has warned, projecting an annual GDP loss of 1.6 per cent for Europe's largest economy by 2028.

The report analySes the potential fallout from the "reciprocal tariffs" announced by US President Donald Trump on April 2, which would impose an additional 20 per cent duty on imports from the European Union (EU), among other trading partners, citing large trade deficits, reported Xinhua.

According to the IW, Germany's direct losses from these measures could reach 200 billion euros, or 1.2 per cent of GDP annually by 2028. With retaliatory responses factored in, total damages may rise to 290 billion euros.

The EU as a whole could face cumulative losses of up to 1.1 trillion euros by 2028, the report estimated.

"Donald Trump is instigating a global trade war that will hurt everyone," the IW warned, adding that despite a 90-day suspension of the tariffs, the resulting uncertainty has already severely impacted global investment planning.

Germany, a highly export-oriented economy, has posted a trade surplus with the United States for 33 consecutive years. In 2024, this surplus reached a record 69.8 billion euros. Data from Germany's statistical authorities showed that the United States accounted for 10.4 per cent of Germany's total exports last year, the highest share since 2002. This makes Germany particularly vulnerable to the impact of US tariff hikes.

The IW urged the EU to respond decisively, suggesting that retaliation could extend beyond goods to include US digital firms and other service sectors. Given the United States' considerable services surplus with the EU, such measures could prove even more effective than targeting goods trade. (1 euro = US$1.14)

--BERNAMA-XINHUA