The President of the German Central Bank warns: Trump's tariff plan could result in a 1% loss in Germany's GDP

On Wednesday, Bundesbank President Joachim Nagel warned that Trump's threat to impose trade tariffs could lead to a recession in Germany. In an interview with Time Weekly, he stated, "If the tariff plan is implemented, our economic output could decrease by 1%." He pointed out that considering the German economy is not expected to grow at all this year and may grow by less than 1% next year, "this is very painful." "If new tariffs are really imposed, we could even fall into negative growth." Germany is suffering from the impacts of weak global demand, sluggish manufacturing, and an energy crisis. Last week's U.S. election cast a shadow over the economic outlook for the Eurozone, as Trump 2.0 could shift U.S. policy towards protectionism. Before the election, Trump had promised to impose tariffs of up to 20% on all countries. The market expects that the German economy will shrink for the second consecutive year in 2024, as an export-oriented country, Germany is suffering from weak global demand, sluggish manufacturing, and an energy crisis. Additionally, the early elections scheduled by the German government for February 23 next year also bring additional uncertainty. Nagel also denied claims that the European Central Bank is lowering interest rates too slowly and emphasized that "price pressures remain significant, mainly due to rising wages in the service sector." Furthermore, falling energy prices have masked price pressures. "As a central bank president, your job is never done," Nagel stated. "The key is to ensure that the inflation rate remains around 2% in the long term." Several Eurozone central bank presidents have expressed concerns about Trump's tariff policy. French central bank governor Francois Villeroy de Galhau believes that Trump's victory threatens economic growth. He told France International Radio on Wednesday, "The outcome of the U.S. election poses risks to the global economy." Finnish central bank governor Olli Rehn told Bloomberg TV earlier this week that the impact of U.S. tariffs will be "medium to long-term."