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Germany faces two more years of recession if US trade war escalates: central bank
- On June 6, 2025, Germany's central bank issued a stark warning that if trade tensions with the United States intensify significantly, the country’s economy may endure a recession lasting up to two additional years.
- This warning follows U.S. President Donald Trump's April 2, 2025 announcement of 'Liberation Day' tariffs, which imposed 10-percent base levies and higher rates on key export countries.
- The Bundesbank projected that if tariffs and retaliatory measures were fully implemented, Germany’s economic output would shrink by half a percent in 2025, driven by a sharp reduction in exports and heightened uncertainty dampening investment.
- Germany, Europe’s top economy, stagnated in 2025 with growth forecasts cut to zero as Chancellor Friedrich Merz plans increased infrastructure and defense spending to support recovery.
- These developments signal serious challenges linked to U.S. trade policy, highlighting risks amid global economic and geopolitical pressures facing Germany’s export-driven economy.
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53 Articles
How the European Union and Germany Can Leverage Their Monetary Power
Amid rising global tensions and U.S. monetary assertiveness, Germany and the European Union face a pivotal choice: issue joint Eurobonds to elevate the euro’s global role and fund strategic autonomy, or risk deeper vulnerability in a multipolar economic order.
Germany faces two more years of recession if the trade war with the United States intensifies, the Bundesbank has warned. In a worst-case scenario, German GDP would shrink by 0.5 percent this year and by 0.2 percent next year.
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Germany faces two more years of recession if US trade war escalates: central bank
Germany could face two more years of recession if a trade war with the United States escalates sharply, the central bank said Friday, a bleak warning for Europe's struggling top economy.
Germany could face another two years of recession if the trade war with the United States were to escalate sharply. (ANSA)
In this way, the entity now anticipates that the German economy will be stagnating in 2025, after the contraction of 0.2% of GDP in 2024 and 0.3% in 2023, when last December it predicted an expansion of two tenths and a year ago it trusted a growth of 1.1%.
An increase in the U.S. trade war could prolong the recession in Germany for two more years, due to the rise in exports and uncertainty about investments, warned the Bank...
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