Automakers and chemical firms report sharp declines in sentiment amid ongoing trade uncertainty, according to Ifo

Expectations have worsened among German exporters in June due to uncertainty regarding US tariffs, according to a survey conducted by the Ifo economic institute.

Earlier this year, US President Trump imposed 20% tariffs on EU goods and 25% duties on steel, aluminum, and cars. Brussels prepared retaliation, but most of the new levies were paused for 90 days to allow talks.

A 10% base tariff and targeted 25% duties remain unchanged.

"The tariff threats from the US are still on the table. An agreement between the EU and the US has yet to be reached," Klaus Wohlrabe, head of Ifo surveys, said in a statement on Wednesday. "This uncertainty is lowering exporters' expectations."

According to the report, the mood among export companies has "clouded over," with the export expectations index falling to -7.4 points in June from -5.0 in May. The index measures how optimistic or pessimistic German manufacturing companies are about their prospects for selling abroad over the next three months.

The trade barriers have raised concerns in German industry, especially the automotive sector, which is grappling with declining sales, growing competition from China, and the shift to e-mobility. Carmakers worry that tariffs could damage their vital export business.

"Companies fear that the growing protectionism around the world will increasingly hamper international trade," said Wohlrabe.

The decline was most noticeable in the chemical and automotive sectors, where expectations turned significantly negative, the report said.

The US was Germany's top trading partner in 2024, with bilateral goods trade totaling €253 billion (around $280 billion), according to official data.

In the first quarter of 2025, the country recorded a €17.7 billion trade surplus with the US-the highest among all its partners. This underscores the potential impact of US tariffs. Experts say the uncertainty has led German companies to delay investments, contributing to the shift in export projections.

The new figures add to signs that the EU's largest economy is struggling to build momentum after slipping into a recession last year. Although German GDP grew slightly (by 0.2%) in the first quarter of 2025, weak global demand and uncertainty in trade policy continue to weigh on its economy.

The report follows a grim forecast from the IMF, which also cut Germany's 2025 growth outlook to zero, predicting it will be the only G7 economy to stagnate this year as its export-driven industries are especially vulnerable to global trade tensions.

(RT.com)