The economists at the Bundesbank stated in the July bulletin, published today, that industrial production and exports increased in the first quarter in anticipation of Trump’s tariffs.
As a result, the German economy grew by 0.4% in the first quarter compared to the previous quarter, though there was a slowdown in the second quarter.
“The underlying trend of the overall economic situation remains weak,” the Bundesbank economists wrote in the bulletin.
Business confidence and activity in the manufacturing sector increased in Germany due to investment expectations from the new German government.
However, the Bundesbank anticipates that the boost to the German economy from these investments will not be immediate.
In the short term, Germany’s exports will be impacted by U.S. tariff policy.
Uncertainty persists regarding the tariffs’ effect on the German economy, as it will depend on their level.
In the June forecasts, the Bundesbank considered tariffs of 10% on imports of goods from the European Union (EU).
Recently, Trump has threatened tariffs of 30% starting August 1, should an agreement not be reached before then.
“If the now-announced tariff rate comes into effect, it poses a significant economic risk,” according to the Bundesbank.
Bundesbank President Joachim Nagel stated in an interview with the economic daily “Handelsblatt” that the EU’s goal should be to quickly reach an agreement with the U.S., but “not at any cost.”
