The Kiel Institute warns that President Trump's proposed 25% tariffs on EU imports could yield severe economic repercussions, with EU exports to the US expected to decline by 15-17%. This shift could lead to a 0.4% contraction in the EU economy alongside a 0.17% reduction in US GDP. Retaliatory EU tariffs might exacerbate the situation, increasing inflation by 1.5%. The German manufacturing sector, notably the car industry, is predicted to experience the most significant losses, coinciding with already troubled market conditions in Europe.
The Kiel Institute reported that Trump's 25% tariffs on EU imports could lead to economic shocks, with EU exports to the US dropping by up to 17%.
Julian Hinz stated that the timing of the tariff policy is critical, as European economies are already underperforming, indicating deepening issues for the manufacturing sector.
The economic impact of these tariffs could worsen due to retaliatory measures from the EU, potentially doubling the economic damage and increasing inflation by 1.5%.
Hinz emphasized that while the overall contraction of the EU economy might appear small, the effects on sectors like manufacturing, particularly German exports, will be severe.
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