Bundesbank Warns U.S. Tariff Threat Could Tip Germany Into 2025 Recession

German Bundesbank President Joachim Nagel said the country could slip into recession in 2025 if Washington follows through on plans to impose a 30% tariff on European Union goods as early as 1 August. He warned that the levy would also erase the central bank’s projection for 0.7% economic growth in 2026, underscoring Germany’s vulnerability to trade shocks. Nagel’s comments amplify findings from the Düsseldorf-based IMK economic institute, which calculated that the tariff would trim about 0.25 percentage point from German GDP growth both this year and next. While the institute expects a modest recovery to 1.2% in 2026 under current policies, it cautioned that the loss of export demand could nullify those gains. Former U.S. President Donald Trump threatened to introduce the duties unless progress is made in trade talks with Brussels. The IMK study notes the United States, Germany’s largest single export market, would also suffer, projecting a 0.7-percentage-point hit to U.S. growth, but said the relative blow to Germany’s export-oriented economy would be immediate. EU officials have drawn up countermeasures covering about €72 billion of American goods should the tariffs be enacted.