“Trump is known for making strong statements and then backtracking.”

Schularick, president of the Kiel Institute for the World Economy (IfW), also told the Frankfurter Allgemeine Zeitung (FAZ) that he considers the likelihood of Trump backing down to be very high. In the US, the acronym "TACO" (Trump always chickens out) has already become established as a formula for Trump's numerous backtrackings: Hardly anyone takes Trump's threats seriously during the negotiation phase.

Even with tariff escalation, recession in Germany is unlikely

However, if Trump doesn't give in, the German economy would be hit hard. "Gross domestic product would grow by 0.5 to 0.6 percentage points less next year," Schularick predicts. However, this would not push Germany into recession due to the federal government's spending programs.