The President of the German Institute for Economic Research, Marcel Fratzscher, expects the US tariffs on steel and aluminum to have a growth-reducing impact of up to one percent of Germany’s economic output.
While the tariffs on steel and aluminum would not have a significant negative impact on their own, Fratzscher told the Rheinische Post, the real problem is the uncertainty caused by US President Donald Trump’s measures. “The problem is not the tariffs themselves, but the uncertainty they create”, he said.
Furthermore, the tariffs on Canadian and Mexican products will have indirect effects on the German economy and additional US tariffs on German and European products can be expected, the DIW President added.
“This uncertainty and escalation in the trade conflict could cost the German economy up to one percent of its output by the end of next year, with a great deal of caution advised when making concrete predictions. A recession of the German economy this year due to the US tariffs has become more likely”, Fratzscher said.