Germany says ‘misguided’ Trump policies hitting economy

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Germany said Wednesday US President Donald Trump’s “misguided policies” were hitting its economy as the fallout from the Middle East war adds to headwinds for the eurozone’s industrial powerhouse.

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The turmoil unleashed by the conflict, especially the surge in energy prices, has dealt a fresh blow to the world’s third-biggest economy as it is struggling to rebound from a long decline.

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“We are facing a serious threat from a geo-economic shock,” said Lars Klingbeil, Germany’s finance minister and vice chancellor.

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“President Trump’s misguided policies are having a direct impact on the wallets of people here in the country.”

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Klingbeil, of the centre-left Social Democrats, also took aim at companies seeking to profit from the crisis, labelling their actions “despicable”.

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“It is unpatriotic what we are seeing from corporations,” he said during a speech in Berlin.

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Officials have voiced suspicions that energy firms are unfairly hiking petrol prices to profit from the crisis, and have vowed to strengthen oversight of the sector.

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There are fears that pricier energy and other issues, such as supply chain snarls, could push up inflation more broadly.

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Klingbeil reiterated several proposals he had made in recent days aimed at easing the impact on households.

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These include a windfall tax on extra profits earned by energy firms during the crisis, and bigger tax breaks for commuters, he said.

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Germany’s economy had only just been getting back on its feet following the energy shock unleashed by Russia’s full-scale invasion of Ukraine in 2022.

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That crisis pushed the economy into two straight years of recession, in 2023 and 2024.

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It had eked out meagre growth last year and there were hopes of a stronger rebound this year, although that is now in doubt.

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