US tariffs vs. German fiscal policy – who wins?
Following the trade agreement between the EU and the US, tariffs on US imports from the EU will be significantly higher than before Donald Trump took office.
Commerzbank Economic Research
08/01/2025
Higher US tariffs ...
Last weekend, the EU Commission and the US government agreed on a trade deal. Under this deal, most shipments from the EU to the US will be hit with a 15% tariff. Aluminum and steel, as well as related products, will still be taxed at 50%, while some goods like aircraft and aircraft parts, certain chemicals, and generic drugs can be imported into the US without tariffs (see also here ).
... slow down German exports to the US
According to our estimates, the effective average tariff rate on US imports from Germany will be 12.8% based on these agreements. This would be significantly higher than when Donald Trump took office in January this year and also slightly higher than in May, the last month for which official figures on the effective tariff rate are available.
This significantly higher tariff clearly makes it much more difficult for German companies to access their most important export market, thereby slowing German exports to the US. Based on experience from Trump's first term in office, when he imposed high tariffs on imports from China in particular, price-adjusted German exports are likely to be between 20% and 25% lower in two years than they would have been without these changes. This is likely to reduce real GDP by up to 0.4% on its own. With demand from China also weakening at the same time, exports to countries outside the EU are likely to slow down the German economy.
For full text see attached PDF-Version.
