The Bundesbank warns that if the tariffs take effect, Germany could face significant downward risks, further challenging its export sector.

Despite the overall outlook, one-third of firms surveyed view current sales opportunities in North America positively.

The anticipated economic losses from US tariffs would be significantly larger for the US than for Germany, emphasizing the broader global impact.

The IMK institute forecasts that if the US implements new tariffs on August 1, 2025, Germany could face zero growth in 2025 and only 1.2% growth in 2026, contrasting with previous expectations of recovery and modest growth.

The US has historically been a crucial export market for Germany, accounting for nearly 10% of its exports, highlighting the potential economic impact of the tariffs.

In the first quarter of 2025, Germany's economy unexpectedly grew by 0.4% as companies expedited deliveries in anticipation of US tariffs, temporarily boosting industrial production.

The IMK suggests that increased public investment could help mitigate the economic risks posed by the tariffs.

Earlier forecasts by the IMK predicted a recovery for Germany's economy starting late 2025, driven by increased public investments and defense spending, but these are now under threat.

These tariffs, which could be as high as 30% on EU imports, are expected to reduce German economic growth by about 0.25 percentage points in 2025 and 2026, with the Bundesbank warning of significant downward risks to the economy.

Approximately 10% of Germany's exports are sent to the US, making the country vulnerable to changes in US trade policy, which could impact its export sector.

A survey indicates that over half of Germany’s engineering firms do not expect sales growth in 2025, with 30% anticipating declines due to ongoing trade tensions.

Despite these challenges, about 60% of German companies remain optimistic about nominal growth in 2026, although sales growth for most may not resume until then.

The Bundesbank notes that the benefits from previous anticipatory actions are now diminishing, indicating a need for new strategies.