OR Germany he will be the big loser in a possible Trump presidency, which could spark a trade war between the US and Europe with Germany’s once enviable industrial powerhouse at risk of degenerating into stark weakness.

The Republican former president Donald Trump plans to impose flat tariffs of 10% and 20% on nearly all imports as well as tariffs of 60% or more on goods from China, measures he says would boost American manufacturing.

A report by the German economic institute IW – provided exclusively to Reuters – found that if a Trump administration imposed 20% tariffs on the EU and the bloc responded accordingly, eurozone GDP would fall by 1.3% in 2027 and in 2028 and in Germany it would decrease by up to 1.5%.

Germany, Europe’s largest economy, will this year be the only G7 country not to have recorded growth for two consecutive years, according to the International Monetary Fund’s latest forecast.

A trade showdown with the US — its main trading partner — would deal a major blow to production.

“If US protectionism increases, then medium-term sources of growth for Germany will decrease,” Jacob Funk Kierkegaard of the Peterson Institute for International Economics told Reuters.

The US overtook China as Germany’s largest trading partner this year, after eight consecutive years of China being in first place.

“Half of German growth always comes from exports, and if you look at what’s happening in the world, you will see that this pillar is under attack,” Economy Minister Robert Habeck said earlier in October when presenting the government’s economic forecasts.

Another blow to the industry

German exports contracted by 0.3% in 2023 due to reduced global demand and geopolitical tensions. The government expects a contraction of 0.1% for this year.

A study by the Hans Boeckler Foundation shows that 20% tariffs are likely to reduce output in Germany by one percentage point within the first two years of their implementation.

German exports to China are likely to fall by almost 9.6% overall if a trade war breaks out between the US and China, according to a study by the Ifo Institute.

This study shows that German exports to the US would likely fall by 14.9% in a scenario where the US imposed tariffs of 60% on goods from China and 20% on goods from other countries.

Exports of German cars would be particularly at risk of being hit — specifically they would fall by 32% — as would exports of pharmaceuticals (down by 35%), according to Ifo.

That would deal another blow to German industry — another pillar of the German economic model — which has been in decline for years with no recovery in sight.