Economic contraction in Germany and UK driven by concerns over Trump tariffs

In April 2025, significant economic concerns were reported in Germany and the United Kingdom due to President Donald Trump’s tariffs on imports. Businesses in both countries exhibited reduced production, causing worries about the broader impact of these tariffs on global trade. The first reading of Germany's Purchasing Managers' Index (PMI) for this month came in at 49.7, indicating a contraction from the previous month’s figure of 51.3. Similarly, the UK's PMI recorded a concerning 48.2, signaling the lowest level of business confidence since November 2022. These trends reflect the lasting effects of tariff-related uncertainty on business operations and consumer demand. Experts have observed that the contraction in the manufacturing and service sectors within these economies can be attributed to multiple factors. In their report, S&P Global and Hamburg Commercial Bank highlighted that tariff fears were dampening business confidence and affecting demand. Survey respondents from the UK indicated widespread acknowledgment of the negative effects of US tariffs, leading to a slump in client confidence. Economists from Berenberg suggested that domestic economic weakness and considerable international pressures are exacerbating the situation, branding it as a broader economic downturn. Beyond these immediate concerns, early data is already hinting at a decline in global trade activity, which is further complicated by Trump’s unpredictable tariff policies and retaliatory measures from trading partners. South Korea recently reported a 5.2% drop in exports in the first 20 days of April compared to the previous year, suggesting that the effects of these tariffs are being felt internationally. The International Monetary Fund (IMF) also downgraded economic growth forecasts for a variety of countries, including the United States, Germany, and the UK, warning that ongoing trade tensions could pose a significant threat to global economic stability. Despite the adverse impact on Germany and the UK, the broader eurozone economy seemed to maintain a somewhat stable performance. The PMI for the eurozone recorded 50.1 this month, indicating flat output overall, though it was the lowest in four months, and new orders decreased at an accelerated rate. This indicates that while some regions are faring slightly better, growing concerns about tariffs continue to loom large over the economic landscape in Europe and beyond, creating uncertainty about future growth and stability.