Germany’s economy faces the risk of another recession if the US proceeds with tariffs on imported goods, warns Joachim Nagel, president of the Deutsche Bundesbank.
In an exclusive interview with BBC World Service, Nagel stated that tariffs could push Europe’s largest economy into further decline, following two years of contraction. Without tariffs, the Bundesbank forecasts marginal growth of 0.2% in 2024, but new trade barriers could derail recovery efforts.
Nagel criticized US President Donald Trump’s 25% tariff on steel imports, calling it “economics from the past” and supporting the EU’s retaliatory measures set to take effect on April 1. He warned that such policies would lead to economic losses on both sides, though he expressed hope for a resolution once the costs become evident to the US.
Germany, long reliant on exports, is particularly vulnerable to trade disruptions. While Nagel dismissed claims that Germany is the “sick man of Europe,” he acknowledged the challenges posed by an increasingly protectionist global economy. Meanwhile, German consumers may face higher prices on American goods such as bourbon, peanut butter, and orange juice.
In response to economic pressures, Germany has made historic policy shifts, increasing public spending on defense and infrastructure. Nagel described these moves as necessary adaptations to “tectonic changes” in global economic conditions, signaling a commitment to long-term sta
bility.
