German Finance Minister Lars Klingbeil has called for discussions with the United States following the American president’s tariff threat against the European Union. President Donald Trump announced that all EU imports would be subjected to a 50% tariff starting June 1st. An economic research institute in Berlin has estimated that this tariff increase could cause Germany’s GDP to shrink by 0.1% this year, with losses expected to grow in the following years.
The German Economic Institute estimates that the German economy could lose approximately 200 billion euros by the end of 2028 due to these tariffs. If the EU imposes retaliatory tariffs, these losses could escalate to 250 billion euros. The immediate impact of Trump’s tariff threat was felt in the automobile sector, where Japanese car makers were hit hard, and German automakers saw significant stock declines. BMW shares dropped by 3.7%, Volkswagen by 2.6%, and Mercedes-Benz by 4%.
Despite the escalating trade tensions, Germany has reiterated its support for the EU’s ongoing stance on US tariffs while simultaneously seeking to reopen discussions with the US to mitigate the potential economic shock expected from June 1st. The German finance minister emphasized that Germany is not looking for further provocations but aims for negotiations after speaking with his American counterpart, Scott Bessant.
President Trump’s tariff threat came after his frustration with trade discussions with the European Commission, which he described as unproductive. Trump has long accused the 27-member EU bloc, which includes Germany, of exploiting the US in trade matters and being difficult to negotiate with. He stated that the EU was formed to hurt the United States and has treated the US unfairly over the years. Trump highlighted the US trade deficit with the EU, particularly pointing to the large volume of cars sold by Mercedes, BMW, Volkswagen, and others in the US, while American car makers face restrictions on selling cars into the EU.
As the situation develops, both sides appear poised for challenging negotiations amid fears of a prolonged trade conflict and significant economic repercussions for Germany and the broader EU.
Disclaimer:
This article is based on current available information and economic estimates, which may change as new developments occur. The views expressed do not necessarily reflect those of all parties involved. Readers are advised to consult multiple sources and consider the evolving nature of international trade relations before making decisions based on this information.
