The Bundesbank is sounding the alarm. In a report released on Friday, Germany’s central bank warned that the country could face an extended recession lasting two additional years if the trade conflict with the United States escalates.
This warning comes amid mounting transatlantic economic tensions, as U.S. President Donald Trump threatens to impose new tariffs.
If these tariffs are implemented in full starting in July—without sectoral exemptions—and the European Union responds with retaliatory measures of equal magnitude, the economic fallout could be severe for Europe’s leading industrial power.
According to Bundesbank projections, Germany’s gross domestic product (GDP) would shrink by 0.5% in 2025, followed by a further decline of 0.2% in 2026.
Such a prolonged contraction would plunge the country into an unprecedented recession, further weakening an already fragile economic recovery.
The central bank emphasized that this negative scenario hinges on two key factors:
– a sharp decline in exports, a crucial driver of the German economy.
– heightened uncertainty surrounding corporate investment, as companies are deterred by the instability of global trade rules.
Already grappling with a slowdown in global demand and a complex industrial transition, Germany’s export-driven economic model is coming under intense strain.
In this context, the Bundesbank is urging caution and a diplomatic approach to prevent an escalation that, it warns, “would come at a high cost to the German economy and its trading partners.”
As transatlantic negotiations continue, the Bundesbank’s warning could carry significant weight in discussions in both Brussels and Berlin.
In the meantime, German companies—particularly in the automotive and industrial sectors—are bracing for turbulent waters ahead.
What's happening in Tunisia?
Subscribe to our Youtube channel for updates.
