Munich: President of the Munich-based ifo Institute Clemens Fuest has warned of significant risks to the German economy amid the threat of new US tariffs. Fuest fears serious consequences should the European Union retaliate to tariffs recently announced by US President Donald Trump.

According to Qatar News Agency, Fuest stated, "If this turns into a new trade war, Germany faces a recession in 2026," in an interview with the Bild newspaper published on Sunday. Trump's announcement on Friday to raise tariffs on cars and trucks imported from the EU to 25% starting next week has further strained the long-standing trans-Atlantic trade relations. The US President accused the EU of failing to comply with a trade agreement.

Fuest expressed concerns that the planned tariff increases would have a significant impact on the already struggling German automotive industry. The industry, a key sector for Germany's economy, could face substantial challenges due to these new tariffs.