Bundesbank’s Nagel: Trump tariffs could cost Germany 1% in economic output

BERLIN (Reuters) -New tariffs planned by U.S. President-elect Donald Trump could cost Germany 1% in economic output if they come into effect, Bundesbank President Joachim Nagel said in an interview with Die Zeit newspaper published on Wednesday.

“If the new tariffs actually materialise, we could even slip into negative territory,” said Nagel, with Germany already facing weak growth this year and next.

The German economy is not expected to grow at all in 2024 and will likely grow by less than 1% in 2025, according to the central banker.

Nagel, who sits on the governing council of the European Central Bank, also expressed concern over the German job market outlook, telling Die Zeit: “The jobs that we are losing in industry may not be replaced as easily as before by new jobs in the service sector.”

He defended the ECB’s current rates path as appropriate.

The ECB has cut rates three times this year and further cuts at each of its meetings at least through to next April are fully priced in.

“We are not exaggerating. There is still noticeable price pressure, which is mainly coming from the service sector due to wages,” Nagel said.