The increase in tariffs on cars and trucks from the European Union announced by United States President Donald Trump could mean a production loss of almost US$17.58 billion for Germany, an economic institute told Reuters on Saturday.
The estimate of the Kiel Institute for the World Economy (IfW) It aims to alleviate the vulnerability of the European Union’s largest economy to US import tariffs, which have already cost the German car industry billions.
“The effects will be substantial,” said IfW president Moritz Schularick, and production losses would amount to around €30 billion in the long term, according to the institute’s analysis.
Trump announced on Friday that he will increase tariffs on cars to 25% next week, from the previously agreed 15%, claiming that the EU had not fulfilled its trade agreement with Washington.
“Germany’s already slow growth rate would be greatly affected,” said IfW economist Julian Hinz.
The institute currently forecasts the German economy to grow by 0.8% this year. Other European economies with major auto sectors — including Italy, Slovakia and Sweden — could also suffer significant losses, he added.
The chief advisor to the German Finance Minister, Jens Suedekum told Reuters that “the EU should just wait and see what happens for now. It is well known that Trump is quick to suspend or withdraw his grandiose tariff threats.”
Likewise, he added that the US president must explain why he believes that the EU is not complying with the current trade agreement, while specifying that it is also not clear if there is a legal basis for the latest tariff threat. “It all seems pretty impulsive,” he said.
