Week in Focus

01 August 2025: US tariffs vs. German fiscal policy – who wins?

Following the trade agreement between the EU and the US, tariffs on US imports from the EU will be significantly higher than before Donald Trump took office. Although this will slow down German exports to the US, it will not prevent the generally expected upturn in the German economy. This is because the new German government's expansionary fiscal policy and the ECB's interest rate cuts will more than offset this negative effect. For the rest of the eurozone, the net effect of higher tariffs, lower ECB interest rates, and national fiscal policy is less clear.

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