Trump Auto Tariff Hike Could Cut German Output by Nearly $18 Billion
Impact of U.S. Tariff Hike on German and European Automotive Industries
Estimated Economic Losses for Germany
BERLIN, May 2 (Reuters) - The tariff hike on cars and trucks from the European Union announced by U.S. President Donald Trump could cost Germany nearly 15 billion euros ($17.58 billion) in output, an economic institute told Reuters on Saturday.
The estimate from the Kiel Institute for the World Economy (IfW) highlights the exposure of the EU's largest economy to U.S. import tariffs, which have already cost the German automotive industry billions.
Long-Term Output Losses
"The effects would be substantial," IfW President Moritz Schularick said, with output losses rising to around 30 billion euros over the longer term, according to the institute's analysis.
Details of the Tariff Increase
Trump said on Friday he would increase the auto tariffs to 25% next week from a previously agreed 15%, saying the bloc had not complied with its trade deal with Washington.
Potential Effects on German Economic Growth
"Germany's already sluggish growth rate would be hit hard," IfW economist Julian Hinz said.
The institute currently expects the German economy to grow by 0.8% this year.
Broader European Impact
Other European economies with significant automotive sectors - including Italy, Slovakia, and Sweden - are also likely to suffer significant losses, it added.
Advisory Opinions and Political Response
German Government Perspective
The German economy minister's chief adviser advised caution towards Trump.
Recommended EU Response
"The EU should simply wait and see for now," Jens Suedekum told Reuters. "It is well known that Trump is quick to suspend or withdraw his grandiose tariff threats."
Legal and Trade Agreement Considerations
The president must explain why he thinks the EU is not complying with the existing trade agreement, Suedekum said, adding that it was also not clear whether there was a legal basis for the latest tariff threat.
"It all seems quite impulsive," the adviser said.
Additional Information
($1 = 0.8532 euros)
(Reporting by Rene Wagner, Writing by Rachel More, Editing by William Maclean)
