The president of Munich’s Ifo Institute, Germany’s leading economic research center, Klemens Fuest warned that a new round of US tariffs could push Germany into recession. “If this turns into a new trade war, Germany will face a recession in 2026,” Fuest told the Bild newspaper.
US President Donald Trump said on Friday (May 1st) that he will raise tariffs on cars and trucks imported from the EU to 25 percent as early as next week, accusing the bloc of not abiding by the trade agreement. The EU has denied the allegations and said it is keeping all options open regarding a possible response.
The basis for the dispute is the agreement Trump and European Commission President Ursula von der Leyen reached in July 2025, which caps tariffs on most EU imports, including cars and auto parts, at 15 percent. The agreement, however, has not yet received full EU approval, which is not expected before June.
There are huge interests at stake. The US remains a key export market for German carmakers Porsche, BMW and Mercedes-Benz, and a possible increase in tariffs to 25 percent would be a direct blow to one of the most important pillars of German industry.
