Clemens Fuest, IFO President, discusses the impact of tariffs and the Euro exchange rate.

Washington

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

The president of Germany's IFO Institute has cautioned that even a 15% tariff rate, though less severe than previously threatened, would still worsen conditions for the export sector. He noted that while the German economy is showing slow improvement, exporters remain concerned about both tariffs and currency fluctuations, with tariffs being the more pressing issue.

The IFO president also pointed to domestic tax incentives as a factor supporting investment and business sentiment, but emphasized that regulatory reform and stable trade agreements are necessary for a more robust recovery. Recent initiatives to encourage investment are seen as positive, but not sufficient to address underlying challenges such as excessive regulation and uncertainty in international trade.

15% tariffs would still worsen the export sector: IFO President

So, we've seen this slow recovery for a couple of months now and it's continuing but at a very slow rate. So, an improvement this time in the business situation, not so much in expectations, but it's a very small improvement, so it's going slow, but into the right direction at least. I do wonder to what extent the appreciation in the EURUSD exchange rate is putting more pressure on the exporters, along with many other factors, of course, tariffs obviously, but are we close to the pain point, the pain threshold when it comes to the German export sector? It's certainly not helping, although we don't observe anything in the data suggesting that that's the major issue here. I mean, this change in the exchange rate is also mostly a weakness in the dollar, not so much a strength in the euro relative to the rest of the world. Of course, the dollar is important, but what companies have on their mind is certainly more the tariff situation at the moment. But yes, the appreciation isn't helping the exporters. So, let's talk about the tariff situation then. This week, we've seen all these reports about potential 15% tariff rate, obviously a lot better than what the market and what politicians had been fearing. It's not great, though. I mean, maybe I do wonder at what point the market will realize that this is pretty bad news when it comes to the export sector overall, compared to the starting point. How would the economy, how would the exporters, the impacted companies fare under 15%? Exactly. 15% sounds OK, given the things Trump has said and given his threats, but it's certainly not an improvement. It's making things worse. It will weigh on the export sector. Of course, companies would like to see above all an agreement that lasts, so at least get rid of the enormous uncertainty they have to deal with. That would help. And I think the German export sector could live with these 15%, but it's certainly problematic. I mean, it comes on top of the exchange rate, so it will make life a lot more difficult. But the hope seems to be among companies, the hope seems to be at least maybe we can get to a more stable situation so that we can try to adjust. What extent is that what's behind expectations brightening a little bit here among German companies? Well, it's actually mostly what's driving the change at the moment is mostly the improvement in the current business situation. It's true we have an improvement in expectations. It's notable in in companies producing investment goods. So electric engineering machinery. But there are my I would say this is more driven by domestic forces, the so-called investment booster. So the tax incentives introduced by the German government seem to have an impact here. So the hope seems to be that the very weak investment within Germany might recover a little. And that's helping companies. I think it's not so much the international situation. What is going on in the services sector? It looks like the we have seen an improvement in sentiment there, in particular in the current situation assessment. The service sector has been stable for a long time, has been going much better than manufacturing, for instance. And this time we see a slight setback. It's coming from sectors that have been going well, like I.T. services. So also in other sectors, I mean, what's really lacking is a more solid upswing here. And that seems to affect services. Positive area, positive exception. We've seen services, transport and logistics, and that's very much related to manufacturing. So it suggests that the manufacturing is driving the slight recovery here and the rest remains flat. A couple of days ago, we saw the announcement of this made for Germany initiative. Sounds well and good on the surface. I do wonder, though, to what extent it actually tackles one of the biggest problems in Germany's economy, and that is excessive regulation. How do you feel about this initiative? Yes, it doesn't tackle the regulation red tape issue. Still, I think it's a positive sign. It's a symbol, not more, but it's a sign for companies being willing to invest. We we've had more negative news for a long time and now companies have announced more than 600 billion of investments. Of course, one issue is how solid is this? Is this really reliable? The other question is, are these projects that would have taken place anywhere or anyway, or are these really new projects? So the message seems to be 100 billion are additional investment projects. So, I mean, whatever the details, I think overall it's good news, but it's certainly not enough. What we do need is really reduction of red tape, deregulation and also reforms, allowing the government to reduce spending on certain items like pensions, health, and that's lacking so far.

EU Commission President Ursula von der Leyen has said she will meet US President Donald Trump on Sunday in Scotland to "discuss transatlantic trade relations."

Glasgow

Ursula von der Leyen to meet Donald Trump to discuss trade

President Trump signed an executive order Thursday aimed at dramatically changing how the U.S. approaches homelessness.

Trump signs executive order changing U.S. approach to homelessness

Former NFL Wide Receiver Donté Stallworth tells CNN’s Jake Tapper that the reselling of Super Bowl tickets by players and employees has long been an “open secret.” Stallworth believes that imposing fines and threatening player suspensions will significantly curb the practice of selling tickets for profit.

New York

NFL issues fines for selling Super Bowl tickets above face value

Typhoon Co-May has left a trail of destruction across the Philippines, making landfall in the country's northwestern region. Torrential rains and strong winds have battered towns and cities, damaging homes, roads, and farmland. At least 25 people have been reported dead.

Pangasinan

Philippines hit hard by Typhoon Co-May, dozens killed

Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump appeared on Friday to abandon Gaza ceasefire negotiations with Palestinian militant group Hamas, a day after withdrawing their delegations from talks.

Jerusalem

Middle East Conflict

Netanyahu, Trump appear to abandon Gaza ceasefire negotiations

U.S. President Donald Trump is spending five days in Scotland visiting his luxury golf resorts. While the White House touts the economic impact, some locals say the developments have scarred the land and stirred controversy.

Edinburgh

Trump visits Scotland to tour golf courses amid protests

The U.S. Department of Justice is set to meet with Ghislaine Maxwell, Jeffrey Epstein's convicted accomplice, amid mounting political pressure on President Donald Trump over his administration's handling of the Epstein case.

Ghislaine Maxwell to meet with U.S. Justice Dept. amid Epstein probe

Thailand and Cambodia exchanged heavy artillery fire for a second day on Friday (July 25) as their worst fighting in over a decade intensified and spread to new areas, despite international calls for a ceasefire.

Bangkok

Thailand, Cambodia exchange heavy artillery

France intends to recognise a Palestinian state in September at the UN General Assembly, President Emmanuel Macron said in hopes of bringing peace to the region, but the plan drew angry rebukes from Israel and the United States.

Macron says France will recognize Palestine as a state

Ukrainian President Volodymyr Zelensky has approved a draft bill to restore the independence of anti-corruption agencies, following nationwide protests and EU concerns over recent reforms that threatened their autonomy.

Ukraine Invasion

Zelensky approves anti-corruption bill after protests

Chinese and European Union leaders have met in Beijing for their first in-person summit since 2023, addressing a range of contentious issues amidst growing trade tensions. The talks, led by Chinese President Xi Jinping and EU officials Ursula von der Leyen and Antonio Costa, highlighted the complex nature of China-EU relations.

Beijing

China-EU summit ends in climate deal, talks strain over Ukraine

The United Kingdom and India have signed a trade agreement that will reduce tariffs on goods from textiles to whisky, cars and spices and allow more market access for businesses. British PM Keir Starmer hailed the agreement as a “landmark moment” for both countries.

London

UK, India sign free trade agreement during Modi visit

President Trump and Federal Reserve Chair Jerome Powell had a disagreement almost immediately as the two men set foot in the Fed's headquarters in Washington to survey an extensive renovation project on two of the reserve's buildings. Nancy Cordes has more.

Trump, Powell clash during tour of Federal Reserve renovations

Hulk Hogan, the legendary professional wrestler whose real name was Terry Bollea, died on Thursday at the age of 71, according to World Wrestling Entertainment.

Clearwater

Wrestling legend Hulk Hogan dead at the age of 71, WWE says

At least 12 were killed as a Thai-Cambodian border dispute escalated into deadly clashes on Thursday (July 24).

Surin

Thailand bombs Cambodian targets as border clash escalates

According to preliminary data, 43 passengers, including five children, and six crew members were on board.

Tynda

Passenger plane crashes in Russia, killing all 49 people on board

Pro wrestling legend Hulk Hogan has died, World Wrestling Entertainment said in a statement on social media. He was 71. CBS News' Shanelle Kaul has more.

Hulk Hogan dies at 71, WWE says

The Wall Street Journal reports that former Attorney General Pam Bondi told President Trump his name appeared in the Epstein files. The White House denies wrongdoing.

Report: Trump was briefed on mentions in Epstein files

Columbia University will pay $200 million to resolve federal claims it failed to stop harassment of Jewish students during campus protests. The Trump administration had suspended the school's access to $400 million in funding.

Columbia settles for $200 million over antisemitism claims

Israel issued a statement indicating that Prime Minister Benjamin Netanyahu has asked the Gaza negotiating team to return to Israel for ceasefire talks. CBS News' Ramy Inocencio reports.

Israel brings back Gaza negotiating team for ceasefire 'consultations'

Also in the settlement is an agreement to ask prospective international students “questions designed to elicit their reasons for wishing to study in the United States,” and establishes processes to make sure all students are committed to “civil discourse.”

Columbia University to pay more than $220M in deal with Trump

There are several developments in the cases involving Kilmar Abrego Garcia, the migrant in ICE custody whom the Trump administration wrongly deported. CBS News' Katrina Kaufman reports.

Nashville

Kilmar Abrego Garcia to remain detained following new court orders

Dr. Salvador Plasencia admitted to distributing ketamine to actor Matthew Perry before his 2023 overdose. He is the fourth person to plead guilty in the case and faces up to 40 years in prison.

Los Angeles

Doctor pleads guilty in Matthew Perry death case

While both sides acknowledged progress on humanitarian issues, talks on a full ceasefire remain stalled. Turkish Foreign Minister Hakan Fidan called for "result-oriented negotiations" to end the devastating war.

Istanbul

Russia and Ukraine conclude third round of peace talks in Istanbul

A passenger plane has crashed in southeastern Russia with up to 49 people onboard. Emergency services say the An-24 aircraft took off from the city of Khabarovsk and was heading to the town of Tynda. Wreckage was found on a mountainside around 15 kilometres from the flight's intended destination.

Russian passenger plane with 49 on board crashes

Ukraine's President Volodymyr Zelenskiy vowed to retain the independence of anti-corruption agencies, bowing to pressure from the first wartime street protests and rare rebukes from European allies.

Kyiv

Zelenskiy to protect anti-corruption agencies, bows to protests

U.S. President Donald Trump's name is among the many appearing in the Epstein files, according to the Wall Street Journal, and he was told as much earlier this year by the U.S. Justice Department.

Trump calls reports he knew his name is in Epstein files ‘fake news’

Dr. Salvador Plasencia, the doctor accused of supplying Matthew Perry with ketamine in the month leading up to his death, has pleaded guilty to four counts  of distribution of ketamine. Plasencia is the fourth of the five people charged in connection with Perry's death to plead guilty.

California

Doctor accused of supplying ketamine to Matthew Perry pleads guilty

Russia and Ukraine have exchanged prisoners following the latest round of talks in Istanbul. The swap, involving dozens of soldiers — some severely wounded and held since the war’s start in 2022 — took place on Wednesday night. While the prisoner exchange marks a rare point of agreement, both delegations remain divided on ceasefire terms.

Ukraine-Russia talks: Delegations remain divided on ceasefire terms

After reviewing the Epstein files, Attorney General Pam Bondi told President Trump his name appears alongside many others, according to a new report in the Wall Street Journal. CNN’s Paula Reid details what we know.

15% tariffs would still worsen the export sector: IFO President

Breakdown

See The Full Story

Global Tariffs