FRANKFURT, July 17 (Xinhua) -- German Bundesbank President Joachim Nagel said on Thursday that higher U.S. tariffs on European Union (EU) imports are likely to present a significant downside risk to Germany's economic outlook.
U.S. President Donald Trump announced on Saturday the decision to impose a 30 percent tariff on imports from the EU and Mexico starting Aug. 1.
Before Trump's announcement, the German central bank had projected economic stagnation in 2025, followed by modest growth of 0.7 percent in 2026.
However, Nagel warned that the outlook could worsen significantly due to the higher U.S. tariffs. "A recession in Germany in 2025 cannot be ruled out," he was quoted as saying by local media, adding that the elevated tariffs could potentially erase any expected gains in 2026.
In its monthly report released Wednesday, the Bundesbank described the German economy as continuing to exhibit signs of weakness.
While the German federal government's 2025 budget has helped lift sentiment, the bank noted that any positive impact on growth is likely to be delayed due to heightened external uncertainties, particularly the escalating threat of U.S. trade barriers.
