Donald Trump, the former U.S. president and Republican presidential candidate, is projected to cause a 1.3% decrease in the Eurozone's (20 countries using the euro) gross domestic product (GDP) four years later if he returns to power and imposes a 20% universal tariff.
Tariffs are taxes imposed by a country on imported goods, which increase import prices and reduce international trade, thereby acting as a factor that hinders economic growth.
According to Handelsblatt and others, the German Economic Institute (IW) stated in a report on the 24th (local time) that if the U.S. government imposes a 20% universal tariff starting next year following Trump’s election, and the European Union (EU) responds with the same tariff rate, the Eurozone GDP is expected to decrease by 1.3% and Germany’s by 1.5% by 2028. Trump has pledged that if re-elected, he will impose a 60% tariff on Chinese imports and a 10-20% universal tariff on imports from other countries.
Germany is predicted to suffer a GDP loss of 180 billion euros (approximately 268 trillion won) four years later. If the U.S. and the EU impose mutual 10% tariffs, Germany’s expected GDP loss would decrease to 127 billion euros (approximately 189 trillion won).
The International Monetary Fund (IMF) also estimated that assuming a 10% bilateral universal tariff, global GDP would decrease by 0.8% next year and 1.3% in 2026. The German ifo Institute for Economic Research forecasted that if the universal tariff pledge becomes reality, Germany’s exports to the U.S. could decline by up to 15%.
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