Frankfurt, Germany – The president of Germany’s central bank has warned that tariffs on goods imported into the US could push Europe’s largest economy into another recession. Joachim Nagel, head of the Deutsche Bundesbank, expressed concerns over the potential impact of tariffs on the already contracting German economy during an exclusive interview with the BBC World Service.
Nagel emphasized the negative consequences of imposing tariffs, stating that “there are only losers” in such scenarios. He also criticized US President Donald Trump’s tariff policy as outdated and detrimental to global trade stability. With the EU implementing retaliatory measures against the US tariffs, Nagel highlighted the possible risks of a global trade war while acknowledging the necessity for the EU to respond.
The German export economy, known for iconic brands like BMW, Mercedes, Volkswagen, and Audi, could face challenges due to increased tariffs and uncertainties in the global market. Despite these challenges, Nagel expressed confidence in Germany’s economic foundation, citing the strength of small and medium-sized enterprises in the country.
As Germany prepares for potential price increases on American products, consumers may feel the impact of the trade tensions. The head of Germany’s federation of wholesale, foreign trade, and service warned of higher prices on goods like orange juice, bourbon, and peanut butter imported from the US.
Nagel addressed recent changes in Germany’s economic policy, noting the country’s shift to allowing increased borrowing for defense and infrastructure spending. He described these changes as necessary in a time of “tectonic shifts” in the global landscape, providing Germany with flexibility for future economic recovery.
In conclusion, Nagel expressed hope for a resolution that prioritizes good policy over trade tensions, emphasizing the importance of stability and adaptability in the face of evolving economic challenges. Despite the uncertainties ahead, Germany aims to navigate the changing global trade environment with resilience and strategic planning.