ECB’s Nagel: US trade tariffs on the EU could push Germany into recession this year

Dhwani Mehta FXStreet

European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel warned in a BBC News interview on Thursday, “US trade tariffs on the European Union (EU) could push Germany into recession this year.”

Meanwhile, a Chinese official urged the US to cancel tariffs on steel and aluminium.

Market reaction

Nagel’s comments keep the offered tone intact on the Euro, as the EUR/USD pair loses 0.10% on the day to trade at 1.0877.

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD climbs to two-day highs past 1.3200

GBP/USD picks up extra pace and surpasses the 1.3200 threshold on Thursday. That said, Cable manages to shrug off initial weakness and regain balance on the back of the fresh selling pressure hurting the Greenback.

EUR/USD stays consolidative around 1.1370

EUR/USD regains momentum and trades with modest gains around 1.1370 ahead of the opening bell in Asia. The pair sets aside three daily declines in a row and picks up pace on the back of the lacklustre performance of the US Dollar, particularly after US data failed to reinforce Fed rate hike bets.

Gold bounces from 2026 lows, remains pressured

Gold reverses part of its recent weakness on Thursday, managing to reclaim the area just above the $4,000 mark per troy ounce. The precious metal regains traction on the back of renewed selling interest in the Greenback, although expectations of rate hikes by the Fed are likely to keep buyers on the sidelines for now.

Three reasons to avoid buying Bitcoin at $60,000

Bitcoin (BTC) hovers around $62,000 on Thursday, recovering from a brief dip below $60,000 the previous day. Although dip buyers anticipate a rebound in BTC from its psychological support zone, bearish signals from the upcoming Bitcoin options expiry, Exchange Traded Funds (ETFs) outflows, and large-wallet investor activity warn that selling could snowball in the coming period.

Micron prints perfect, and now the chart has to answer

Memory’s biggest name just delivered the cleanest quarter of its life, and the most interesting thing about it is that the stock isn’t sure what to do with it. Micron closed out fiscal Q3 with revenue of $41.5 billion, up 346% on the year, a fifth straight record. Gross margin came in at 84.9%, up from 39% the same quarter a year ago. Earnings landed at $25.11 against a Street sitting near $20.49.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.