BERLIN, July 30 (Reuters) - Germany's economy contracted

by 0.1% in the second quarter, data showed on Wednesday, as

demand from the United States slowed following months of strong

purchases in anticipation of U.S. tariffs.

The contraction was in line with forecasts, reversing

the growth recorded in the first quarter, when importers in the

U.S. bought more goods earlier than usual because they expected

tariffs to go up.

This contraction left GDP still stuck at its pre-pandemic

size, said Franziska Palmas, senior Europe economist at Capital

Economics, who added that it was "partly, but not solely," due

to the reversal of tariff front-running.

Investment in Germany fell in the second quarter, while

consumption and government spending rose, compared to the

previous quarter, the statistics office said.

The office also revised first-quarter growth downward to

0.3% from the previous 0.4%.

The U.S. struck a framework trade agreement with the

European Union on Sunday, imposing a 15% import tariff on most

EU goods, half of what was originally threatened. The agreement

helped avoid a bigger trade war between the two allies, who

together make up almost a third of global trade.

The U.S. was Germany's biggest trading partner in 2024 with

two-way goods trade totalling 253 billion euros ($278 billion).

"Germany is likely to be hit harder than other major

economies by tariffs and continue to struggle this year before

fiscal stimulus starts to boost the economy in 2026," Palmas

said.

Despite optimism

in recent surveys

, Wednesday's GDP data is "a painful reminder that optimism

alone does not automatically bring back strong growth", said

Carsten Brzeski, global head of macro at ING.

"The economy's flirtation with yet another year of

stagnation continues."