BERLIN (Reuters) - A German economic institute has lowered its growth forecast for Europe's largest economy, citing a deepening trade dispute between the United States and China as a danger to exports.
German manufacturers rely on the world's two largest economies for growth, and businesses have warned that an escalation in the tariffs war between them could hurt exports.
The IW economic institute in Cologne lowered its growth forecast to 1.8 percent this year and 1.4 percent in 2019 from a previous estimate of 2 percent for both calendar years.
"The power struggle between the United States and China is being felt here - exports are falling and companies are investing less," it said in a statement.
China said on Tuesday that it had no choice but to retaliate against new U.S. trade tariffs, raising the risk that President Donald Trump could soon impose duties on virtually all of Chinese goods that Americans buy.
Trump had said he was imposing 10 percent tariffs on about $200 billion worth of imports from China and threatened duties on about $267 billion more if Beijing retaliated.
Germany's Ifo institute said on Tuesday that the escalating dispute could be good for European Union countries.
The EU could use China's need to compensate for falling trade with the United States in other markets to get Beijing to make concessions that allow European manufacturers to boost their competitiveness in the Chinese market, it said.