Germany expects zero GDP growth this year, blames Trump tariffs

Germany's economy is expected to post zero growth in 2025, outgoing Economy Minister Robert Habeck said Thursday, blaming US President Donald Trump's trade policy.

"The US trade policy of threatening and imposing tariffs has a direct impact on the German economy, which is very export-oriented," he said, presenting the forecast.

The German government had previously expected slight GDP growth of 0.3 percent for this year after Europe's top economy shrank for the past two years.

The United States, a key destination for German products from cars to chemicals, is its largest trading partner and last year took about 10 percent of its exports.

The United States under Trump now levies a 10 percent tariff on European Union exports into the country, having earlier announced a higher 20 percent rate which was then paused.

"Tariffs and trade policy turbulence are hitting the German economy harder than other nations," Habeck said.

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"We depend on open markets, functioning markets, and a globalised world. That's what has made this country rich," he told a Berlin press conference.

German GDP shrank by 0.3 percent in 2023 and by 0.2 percent in 2024, suffering from higher energy prices following Russia's full-scale invasion of Ukraine.

It has also been hit by increasingly fierce Chinese competition in key industries such as automobiles and machinery.

"I would say that we are going through a paradigm shift when it comes to the basic earners for the German economy," Habeck said.

"Our big trade partners, China and the USA, and our neighbour, Russia, are causing us problems."

Source: AFP