Germany could see up to 90,000 jobs lost within a year as a consequence of new US tariff policies, according to Andrea Nahles, head of the Federal Employment Agency.
Speaking to Süddeutsche Zeitung in an interview published on Friday, Nahles described the threat posed by US trade policy as “massive,” citing fresh research from the Institute for Employment Research (IAB) and other economic institutes.
The warning comes amid growing uncertainty over the economic direction of the United States under President Donald Trump. The reimposition of a 25% tariff rate on select European goods, part of Trump’s broader protectionist trade agenda, is expected to disproportionately affect German exporters in the automotive and industrial sectors. The labour market impact, according to the IAB’s projections, could reach 90,000 lost jobs if the tariffs remain in place for a full 12 months.
“The problem is this lack of predictability, which is doing us massive damage,” Nahles said. “It prevents companies from investing, hiring and training people.”
She characterised Washington’s trade posture as “erratic,” warning that it continues to act as a drag on the German economy at a time of heightened vulnerability.
Germany’s economy, the largest in Europe, has already entered a prolonged period of stagnation. Unemployment rose more sharply than expected last month, edging closer to the symbolic 3 million mark — a level not reached in over a decade. This trend, combined with sluggish industrial output and declining business sentiment, has led to growing concern that Germany may be heading into its third consecutive year of economic contraction.
Such a scenario would be unprecedented in the post-war period, and would present a significant challenge for Chancellor Friedrich Merz, who took office promising to end the country’s economic decline. With Merz under pressure to deliver tangible improvements to growth and employment figures, the prospect of intensified trade tensions with the US presents a major political and economic setback.
While the government has so far refrained from outlining specific retaliatory measures, German officials have expressed concern over the wider implications of the US position. The Merz government has called for “reliable transatlantic cooperation” and reaffirmed Germany’s commitment to open markets. However, Berlin remains limited in its capacity to respond independently, with trade policy largely determined at the EU level.
European Commission officials have reportedly opened discussions with member states regarding potential countermeasures or dispute mechanisms within the framework of the World Trade Organization. However, with the WTO’s dispute settlement process weakened in recent years — in part due to US opposition — the prospects for timely resolution remain uncertain.
The German automotive sector, which has a significant export footprint in the United States, is seen as particularly exposed. Major manufacturers including BMW, Mercedes-Benz and Volkswagen could see reduced sales volumes or face increased production costs if retaliatory measures or shifts in supply chains follow. The knock-on effect on the broader industrial supply chain and labour market would likely compound Germany’s existing economic challenges.
Labour market dynamics in Germany have already been strained by demographic pressures and persistent skills shortages, particularly in technical and manufacturing professions. While long-term vacancies remain high in some sectors, recent data from the Federal Employment Agency shows a marked decline in new job postings, with companies exercising caution amid global uncertainty.
The current environment presents a conundrum for German policymakers: the country faces long-term structural labour shortages, yet risks rising unemployment in the short term due to external shocks. Nahles’ intervention appears intended to press the urgency of this dilemma, particularly in light of increasingly volatile international trade conditions.
The debate also intersects with wider concerns within the EU over economic resilience and industrial strategy. With both China and the United States pursuing assertive economic policies, Brussels has been seeking to strengthen its internal market, invest in green and digital industries, and enhance the bloc’s capacity for strategic autonomy. However, such measures are unlikely to deliver short-term relief to affected workers or companies.
As Germany enters the second half of 2025, analysts are closely monitoring both domestic economic indicators and international developments. The potential job losses projected by the IAB, if realised, could tip the balance in favour of more interventionist policies in Berlin or a more combative posture towards Washington. For the moment, however, the German response remains cautious, amid continued hopes that dialogue with the US administration might avert a full-blown trade confrontation.
