Thursday, November 14, 2024

Trump’s Tariff Plans Could Cost Germany 1% of GDP, Nagel Warns

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(Bloomberg) — Bundesbank President Joachim Nagel warned that Donald Trump’s threatened trade levies risk derailing the German economy.

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“If the tariff plans are implemented, it could cost us 1% of economic output,” he told Die Zeit newspaper in an interview published Wednesday. “If the new tariffs are actually imposed, we could even slip into negative territory.”

Last week’s US election has cast a pall over the prospects of the euro-area economy, as the return of Trump to the White House might also see a protectionist turn from the new president.

Ahead of the Nov. 5 vote, Trump pledged 60% tariffs on China and as much as 20% on everyone else — the biggest trade shock since the Smoot-Hawley Act that deepened the Great Depression of the 1930s.

Asked about European Central Bank policy, Nagel highlighted “still noticeable price pressures, which are mainly due to wages in the service sector.”

“This price pressure is being masked by the fall in energy prices,” he said.

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