Reciprocal Trump Tariffs Would Only Slightly Reduce German Exports to the United States

President Trump’s new reciprocal US tariffs would reduce German exports to the United States by less than 3%. The ifo Institute has simulated these reciprocal tariffs, in other words, if the US were to increase tariffs on products by the amount levied by its trading partners on corresponding US products. If the EU were to take no countermeasures, German exports would fall by 2.4%. “Potentially, over half of all German exports to the United States are affected,” says ifo trade expert Lisandra Flach.

“However, the impact of reciprocal tariffs would be significantly lower for Germany than with a blanket US tariffs increase of 20%,” says Flach. That’s because the gap in tariffs between the US and the EU is relatively small at 0.5 percentage points. According to earlier simulations by the ifo Institute, German exports to the US would fall by around 15% in the case of US tariffs of 60% on China and 20% on the rest of the world (including the EU).

Regardless of the economic effects, Flach views the US President’s new tariff policy as highly problematic: “The planned tariffs increase marks a turning point and is a frontal attack on the rules-based global economic order. In practice, it undermines almost 80 years of multilateralism,” says the ifo expert.

If the EU were to succeed through negotiations in reducing reciprocal tariffs equally on both sides, it would have positive effects according to the simulations. “Should the EU negotiate fully reciprocal tariffs with the US, and Trump agreed to reduce tariffs accordingly, German value added would increase,” says Flach. “Our findings underscore the important role of negotiations in averting the detrimental effects of a trade war.”

The calculations are based on the ifo trade model. The model takes tariffs and non-tariff trade barriers into account. It covers more than 141 countries and 65 economic sectors, which account for over 90% of global value added. In addition, the simulations use comprehensive customs information at product level to calculate customs differences between the US and its trading partners.