Germany warns of recession as Trump announces 25 percent auto tariffs on European Union

May 3, 2026, 4:29:11 PM UTC(17 hours ago)

Impact: High

Affected Assets

President Trump announced plans to increase U.S. tariffs on European cars and trucks to 25 percent starting next week citing non-compliance with trade deals
The Kiel Institute for the World Economy estimates the tariff hike could cost the German economy nearly 18 billion dollars in output
Economic experts warn that an escalation into a full trade war could trigger a German recession in 2026
The German automotive association VDA has called for urgent talks while the EU considers activating anti-coercion tools to protect its interests
Analysts suggest the measures primarily target Germany as it accounts for the largest share of EU automobile exports to the United States

GERMAN ECONOMY MINISTRY: WE TAKE NOTE OF TRUMP'S ANNOUNCEMENT OF HIGHER AUTO TARIFFS, WILL COORDINATE CLOSELY WITHIN EU ON NEXT STEPS