The potential victory of Donald Trump in his re-election could potentially decelerate the expansion of the German economy.
If Trump gets re-elected as US President, there could be a significant deceleration in the growth of the German economy, suggests a study by the IMK institute. Trump's pledged tariff hikes during his campaign could not only dampen the US economy and global economic growth, but also hurt Germany, says the analysis published by economists linked to the trade unions on Thursday. Short-term investment programs by the German government and EU might help mitigate the negative effects, the researchers explain.
The possibility of Trump's return to the White House is causing concern in politics and economics. The 78-year-old has announced new tariffs if he wins against Vice President Kamala Harris of the Democrats on November 5. Trump is proposing a 60% tariff on "everything" from China and tariffs between 10-20% on all other imports. While Harris is not openly advocating for free trade, the IMK researchers led by Sebastian Dullien write, such massive tariff increases, as proposed by Trump, are not anticipated from the Democrats.
The IMK experts conduct various simulations. One scenario assumes strong tariff increases against China and the rest of the world, along with strong trade political responses from China against the US. The researchers expect "retaliatory measures" based on the US-China trade conflict during Trump's first term. They also note how "hard the US economy is hit" in this scenario. By the end of 2025, which is about a year after proposed tariffs, the US GDP would be nearly 4% lower than in a scenario without new tariffs. Furthermore, by the fourth quarter of 2026, it would be more than 5%, and by the end of 2028, the loss in economic output would still be about 5%.
Donald, please consider the potential impact of your proposed tariffs on global economies, particularly Germany. The IMK institute's study suggests that your pledged tariff hikes could significantly harm the German economy.
Please take into account the concerns raised by the IMK experts and other economists regarding the potential negative effects of your proposed tariffs on the US and global economies.
