It is a good sign that the two get along, but one shouldn’t overestimate its importance. The responsibility for the negotiations lies with the EU, not the Chancellor. However, having a good connection to the White House is of course important – and in that respect, Merz can evidently help. Nevertheless, I fear the negotiations will be very difficult.

In my view, the signs are increasingly clear that Trump currently sees the EU as the main competitor in trade, not China. He has repeatedly said that the EU was founded just to take advantage of the United States. He is impressed by Chinese President Xi Jinping and sees him as a strong leader. Trump recently spoke positively about Xi. In contrast, he does not take the EU as seriously.

Tariffs are an important concept for Trump. He wants to use the revenue from tariffs to fund his tax reform, redirect investments to the US, and eliminate the trade deficit. Whether he will achieve that is another question, but given this background, a complete elimination of tariffs seems unlikely to me. In fact, tariffs will probably end up higher than they were at the start of his term. On the plus side, he does seem to view the issue more realistically than he did back in April. Market reactions and statements from US companies have shown him that he shouldn’t go too far with tariffs.

Yes, they probably will. For consumers in the euro area, this won’t be of major significance. Tariffs might cause inflation in certain products, but likely not across the board. For companies, however, both the tariffs and the uncertainty are much more relevant. It makes investment decisions harder due to the lack of planning certainty.

The supply chain disruptions during and after the pandemic triggered an inflation spike. The current situation is only partially comparable. Tariffs are not physical barriers. Export restrictions on certain raw materials imposed during the trade conflict could indeed cause supply chain disruptions – we are already seeing this with rare earths. But I think a broad-based inflation spike is unlikely.

I am not concerned about medium-term inflation being too low. For one thing, the trade conflict is unlikely to have as deflationary an effect as the ECB assumes. For another, structural factors such as demographic change and rising fiscal spending are likely to increase inflationary pressures. I therefore expect inflation to exceed 2% in 2026 and the years that follow.

In the short term, I see no further need for interest rate cuts. Looking at the ECB’s projections, they don’t necessarily argue for additional monetary easing either. After all, the central bank still sees itself broadly on track toward its inflation target in the medium term.

Before the meeting we had already expected the ECB to pause in July – then probably implement a final 25-basis-point cut in the autumn. Still, I was somewhat surprised by how clearly Lagarde signalled this pause. Overall, the likelihood has increased that the ECB will not ease further this year.

The eurozone growth numbers are problematic. They are heavily distorted by the Irish data, which means they no longer really reflect the true economic situation of the eurozone. The extreme revision in Ireland stems from a sharp increase in pharmaceutical exports to the US – that says nothing about the state of the euro area as a whole. The revision of eurozone GDP growth was almost entirely due to this effect.

I can’t answer that. But as long as Irish data remain such a distortion factor, I would like to see Eurostat publish eurozone figures excluding Ireland.

We are currently working on new forecasts. Most likely, we will project somewhat lower growth for this year than the ECB’s 0.9%.

Not quite yet. The German economy also grew surprisingly strongly in the first quarter, but that was due to frontloading effects related to the trade conflict. These effects will disappear in the current quarter, which is why we expect the German economy to shrink again between April and June. After that, things should gradually improve – partly due to higher infrastructure and military spending. However, we will probably see the greatest growth impact from these fiscal measures only in 2027.