Bundesbank Board member says US tariffs will significantly slow German GDP growth

Tariffs of 20% on European exports to the US are likely to lead to a significant decline in the growth rate of the German economy. Meanwhile, the impact on inflation will be more difficult to assess, said Fritzi Köhler-Geib, member of the Bundesbank's Executive Board.

In her opinion, the European Central Bank's intention to make decisions depending on new data at each meeting is the right choice in the current situation. The US tariff policy is one of the elements justifying this approach. As Köhler-Geib explained, tariffs can have a wide range of consequences depending on details including Europe's response.

A little earlier, the Bundesbank had conducted a simulation of this situation. According to the results, a 20-point tariff increase in the US and a moderate response from the EU would lead to a noticeable loss of economic growth in both the United States and Germany. 

Köhler-Geib notes the likelihood of a slight uptick in the European country's GDP in the first quarter. However, she suggests that the economy is likely to stagnate again as early as the second quarter.