President-elect Donald Trump’s proposed protectionist policies, including hefty tariffs, will hurt Europe’s economic standing — leaving crisis-hit Germany particularly vulnerable, Goldman Sachs predicts.
Following Trump’s re-election, the investment bank cut its growth forecasts for the region, predicting fresh trade tensions with the United States, pressure on Europe to increase defense spending and a hit to business confidence from higher geopolitical risk. Trump has repeatedly said America pays too much to defend its European allies, has questioned the role of NATO and suggested a quick resolution to Russia’s war in Ukraine, requiring less US spending.
That spells more pain for Germany’s moribund economy and the country’s largest manufacturer, Volkswagen, beset with troubles of its own. Goldman Sachs now expects the German economy to grow only 0.5% next year because of trade tensions, just over half the 0.9% growth it forecast previously. It also downgraded UK growth in 2025 to 1.4% from 1.6%. Cars are Germany’s single largest export and the US is the country’s largest export market.
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