German business sentiment falls sharply in April on US trade tariffs

LONDON (ICIS)–Germany’s April business confidence fell at the sharpest rate since the start of the Russia-Ukraine war, driven down by the US government’s recently announced “Liberation Day” trade tariffs.

The ZEW economic sentiment indicator for Germany fell by 65.6 points in April from the previous month into negative territory at -14 points, the economic institute said on Tuesday.

March’s index had risen sharply month on month on expectations of higher government spending and the recent European Central Bank (ECB) interest rate cut.

“The erratic changes in the US trade policy are weighing heavily on expectations in Germany, which have sharply declined,” said ZEW president Achim Wambach.

“It is not only the consequences the announced reciprocal tariffs may have on global trade, but also the dynamics of their changes, that have massively increased global uncertainty.”

Export-intensive sectors such as automotives, chemicals, and the metal, steel and mechanical engineering sectors are particularly affected, ZEW said.

The group’s economic sentiment indicator for the eurozone also fell sharply in April, down by 58.3 points to -18.5 points.

ZEW’s current economic situation index for Germany improved slightly but was lower in the eurozone. Both were firmly in negative territory in April at -81.2 points and -50.9 points respectively.