German Banking Association chief: concerned about new tariff confusion coming out of Washington

German Banking Association chief: concerned about new tariff confusion coming out of Washington

German Banking Association Chief Expresses Concerns Over U.S. Tariff Uncertainty

The German Banking Association (GBA) has raised alarms over the escalating unpredictability of U.S. trade policies, which are deepening economic uncertainty for European businesses and financial markets. Deutsche Bank's Jim Reid highlighted that the U.S. faces a critical vulnerability in its massive fiscal deficits, which could limit its ability to sustain aggressive tariff policies without triggering global market instability. This warning comes amid shifting U.S. tariff measures, including temporary 10–15% global levies announced by the Trump administration following a Supreme Court ruling that invalidated most 2025-era tariffs.

German companies operating in the U.S. are particularly vulnerable. A recent survey by the Association of German Chambers of Commerce and Industry (DIHK) revealed that 44% of German firms in the U.S. now anticipate an economic downturn in the next 12 months, up from 7% in late 2024. Only 14% foresee improvement, reflecting widespread disillusionment driven by erratic tariff announcements and retaliatory threats. According to DIHK analysis, trade policy instability has overtaken traditional risks like labor shortages, with 70% of companies now citing economic policy frameworks as their top business risk.

The U.S. approach has also strained transatlantic relations. Trump's ultimatum to EU nations—demanding support for a Greenland purchase or facing escalating tariffs—has drawn warnings from economists about potential countermeasures. The EU's Anti-Coercion Instrument (ACI), which could restrict U.S. access to European markets or impose $100 billion in new tariffs, remains a tool under consideration. Meanwhile, the temporary suspension of "reciprocal tariffs" on EU imports expires on July 9, 2026, adding to the short-term uncertainty.

Financial markets are closely watching how these dynamics unfold. Deutsche Bank noted that U.S. Treasury yields spiked in April 2025 amid tariff-related volatility, signaling investor caution. With the U.S. debt burden at $38 trillion—much of it held by foreign investors—European leaders could theoretically leverage their role as key lenders to pressure policy changes, though practical implementation remains complex.

As negotiations between the U.S. and EU intensify, German businesses and financial institutions are urging a return to stable, predictable trade frameworks to safeguard long-term investment and competitiveness.