Germany’s economy shrank / Photo: Getty Images
New customs duties imposed by the United States could deal a serious blow to Germany’s economy, increasing the risk of a third consecutive recession – an unprecedented case in the modern history of Europe’s largest economy. This was reported by Reuters with reference to leading economists.
In 2024, Germany recorded a record trade surplus with the US of €70 billion, but now, amid the trade war, it is the most vulnerable country in the EU. According to analysts, export-oriented Germany will lose not only in the US market but also in China, and will face stiffer competition in new markets.
“The risks to the economy in 2025 have increased significantly. We expect a third consecutive year of recession,” said Mark Schattenberg of Deutsche Bank Research.
Lizandra Flach, an economist at the Ifo Institute, pointed to three main consequences: a decline in exports to the US, a slowdown in China, and increased competition in global markets.
“Germany is facing a new reality. The world has changed,” said Carsten Brzeski of ING, predicting another recession in 2025.
Currently, the conservatives of Friedrich Merz, the likely future chancellor, and the Social Democrats are in coalition talks and are planning a €500 billion investment fund to modernise infrastructure, strengthen defence capabilities and boost growth.
Holger Schmieding, head of Berenberg’s economic department, emphasises that “the fiscal stimulus, although strong, will not have an immediate effect – the consequences will be felt only in 2026-2027”.
All the analysts interviewed by Reuters emphasise that it will be difficult to overcome the consequences of the trade war without deep structural reforms and strengthening the domestic market.
