Economic Outlook Amid New Tariffs

BERLIN (Reuters) – New tariffs planned by U.S. President-elect Donald Trump could potentially cost Germany 1% in economic output if implemented, warned Bundesbank President Joachim Nagel in an interview with Die Zeit newspaper.

> "If the new tariffs actually materialize, we could even slip into negative territory," said Nagel, noting that Germany is already facing weak growth in 2023 and 2024.

The German economy is projected to stagnate in 2024, with growth expected to remain below 1% in 2025, according to the central banker.

Nagel shared concerns regarding the job market, stating: "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 European Central Bank's (ECB) current path on interest rates as appropriate amidst ongoing economic pressures. The ECB has reduced rates three times this year, and further cuts are anticipated in upcoming meetings, at least until next April.

> "We are not exaggerating. There is still noticeable price pressure, which is mainly coming from the service sector due to wages," Nagel commented.