If Trump re-elected, his 4-year term could cost Germany up to $194B in 'trade war': Report

According to the report, Trump's pledge to increase tariffs to reduce the US trade deficit could cause significant disruptions in global trade.

The IW report says the EU drafted a counter-strategy against such a threat, which states that if a potential Trump administration raises import tariffs to 10% for the EU and 60% for China, the EU would impose equivalent increases in retaliation.

The institute conducted a simulation to assess the potential harm to the German economy if the above occurred and found that the country's GDP would lose more than $137.1 billion over four years.

Meanwhile, another simulation found that if a potential Trump administration and the EU raised their import tariffs to 20% each, German GDP would fall by 1.5%, with losses totaling $194.2 billion within four years.

The IW report says the US economy would also suffer a loss of around 1.3% to 1.5% in GDP in 2025, with the negative effects being felt the most in the first two years and diminishing in the following two.

The IW noted that China, whose behavior in global free trade is described in the report as a challenge, needs retaliatory measures in the form of additional tariffs by the EU and Germany during a geopolitically tense period.