“The fifth consecutive increase in the Ifo business climate index (87.5 after 86.9) shows that German companies defied Trump’s tariff shock also in May. The business climate in the export-oriented manufacturing sector has even improved. Apparently, the positive effects of the ECB’s rate cuts outweigh the higher tariffs. However, Trump’s tariffs should eventually notably dampen the economic upswing. After all, German companies are likely to lose an estimated one-third of their US business in the medium term if the US permanently imposes a 15% tariff on goods from the EU. For the entire year 2025, I still expect the gross domestic product only to stagnate.”
Morten W. Langer
