Germany's GDP falls 0.3% in Q2 as tariffs bite

Germany’s economy contracted again in the second quarter, shrinking 0.3% compared with the previous three months, revised data showed on Friday. The revision from an earlier estimate of 0.1% decline underscored the momentum-draining effects of weaker manufacturing, a softening construction sector, and a downshift in household spending, all occurring as U.S. tariffs weigh on trade.

Industry-related weakness was a major drag. Goods exports fell, and spending on machinery and equipment dropped sharply, signaling ongoing challenges for German manufacturers in the first full quarter after increased U.S. tariffs took effect. Industrial production, in particular, was weaker than initially thought. Private consumption added little support, with household spending revised downward as data for services such as accommodation and food services suggested a bleaker picture for June. Government final consumption, by contrast, rose modestly, reflecting continued fiscal activity, while investments and construction were negative contributors to quarterly GDP.

The development comes after a first-quarter rebound that was partly driven by front-loaded exports to the United States ahead of tariff...