Overview
- Ifo simulations indicate a roughly 0.13% permanent reduction in German output, larger than the EU average.
- The damage flows through three channels: fewer German exports to the US, weaker Chinese demand, and redirected Chinese goods increasing competition in Europe.
- Exports are projected to decline about 15% to the US and 8% to China, with slight increases expected within the EU and the rest of the world.
- Industry bears the brunt, as autos, machinery and pharmaceuticals account for about 60% of German shipments to the US.
- Trade-policy uncertainty has cooled investment, with 30% of planned US projects postponed and 15% canceled, while limited positives for services and agriculture remain minor.