Germany panic as Trump surges in polls - win 'could knock billions of economy'

Germany is bracing for a Donald Trump presidency as he surges in the US polls. A win could potentially knock billions off the Eurozone's top economy.

Worries about an impending trade war between the US and the EU if Donald Trump wins the upcoming election are growing. Trump has seen a boost in some US polls, although many pundits have said the race remains a coin toss.

This would majorly impact Germany as the US is one of its biggest trading partners. In 2023, Germany sent about £131.87bn worth of exports to the US, including packaged medicines, cars, blood, vaccines, antisera, cultures, and toxins.

Germany imported around £58.73bn from the US in 2023, including vehicles, optical and technical equipment, electrical and electronic equipment, mineral fuels, aircraft, pharmaceuticals and spacecraft.

Trump has already said that if he wins the presidency, tariffs on US imports would increase from 10% to 20%.

According to the German Economic Institute, the EU would likely retaliate by raising tariffs on goods imported from the US to 10%. In this case, Germany could experience a loss in gross domestic product of over £105.49bn over Trump’s four-year term.

The German Economic Institute also reported a second scenario that would be even more serious: mutual tariffs between the EU and the US of 20%.

Should this happen, the German economy could lose about £149.52bn, which could translate into a 1.5% fall in GDP by the end of Trump’s term. The EU-27 would see a GDP loss of about 1.3%.

According to Fitch Ratings: “US tariffs would exacerbate existing growth challenges in Europe, particularly for Germany's export-oriented economy, which is already facing cyclical and structural shifts.

“This could negatively affect Eurozone growth and widen the economic performance gap with the US. The added growth risk could also strain public finances, making it difficult to meet deficit and debt targets.”

Other European countries, such as Italy, France and Spain are also likely to face tariffs on exports to the US, according to Fitch Ratings, which estimates the rate of these tariffs to be between 1% to 2.6%.

The highest rate is likely to be applied to Italy, as it exports goods like footwear, apparel and other luxury items, which face more individual tariffs.