Donald Trump. Photo: Evan Vucci / AP/Profimedia
Joachim Nagel, President of the Central Bank of Germany (Bundesbank), has warned that the introduction of tariffs recently announced by Donald Trump could seriously damage the German economy. In an interview with Die Zeit newspaper, he expressed concern that the duties on imported goods that Trump promised to introduce after the presidential election could lead to a loss of up to 1% of the country’s gross domestic product (GDP), Reuters reports.
“If these customs tariffs are introduced, it could cost us 1 per cent of GDP,” Nagel said, warning that such changes could cause an economic slowdown and even move into negative territory.
Trump has promised to impose duties of 60% on goods imported from China and up to 20% on goods from other countries, which will have a significant impact on the global economy and the German economy in particular. At the same time, the German economy is expected to grow very slightly this year, and in 2025 it may grow by only 1%.
Nagel also expressed concern about the situation on the German labour market. According to him, the decline in jobs in the industrial sector is not being compensated for as quickly by the creation of new jobs in the service sector.
In this context, Nagel assessed the current interest rate policy of the European Central Bank (ECB) as acceptable. The ECB has recently cut the rate three times, and analysts expect further rate cuts to be approved at the next meetings.
“There is still considerable pressure on prices, mainly due to wages in the service sector,” Nagel said, adding that this price pressure is somewhat mitigated by falling energy prices.
The latest Eurostat data showed that the euro area inflation rate rose to 2% in October 2024, up from 1.7% in September. This increase was mainly driven by service tariffs and higher food prices, while energy prices fell by 4.6% in October, following a previous decline of 6.1% in September.
