Germany seeks to head off trade war
• No solution in sight yet, says economy minister after Trump ditches G-7
Germany sees no immediate solution to the trade dispute between the US and other major economies but remains open to talks “among friends”, Economy Minister Peter Altmaier said on Monday, seeking to head off a full-blown global trade war.
US President Donald Trump backed out of a joint communiqué agreed by Group of Seven (G-7) leaders in Canada at the weekend that mentioned the need for “free, fair and mutually beneficial trade” and the importance of fighting protectionism.
Trump, who has imposed import tariffs on metals, is furious about the US’s large trade deficit with key allies.
“Fair trade is now to be called fool trade if it is not reciprocal,” he tweeted on Monday.
As Europe’s biggest exporter to the US and with more than a million German jobs at stake, Germany is desperate to avoid an EU trade war with the US.
“I believe a win-win situation is still possible,” Altmaier, one of Chancellor Angela Merkel’s closest lieutenants, told broadcaster Deutschlandfunk.
“At the moment, however, it seems that no solution is in sight, at least not in the short term ...
“We have not made any progress in the past few days but rather, as we saw with the rejection of the summit declaration, we have gone backwards.”
Merkel said on Sunday the EU would implement countermeasures against US tariffs and described Trump’s rejection of the G-7 communiqué as “sobering and a bit depressing”.
Investors are fearful of a titfor-tat trade war, though markets were calm on Monday.
“The American withdrawal from the G-7 communiqué has increased the risk of a real trade war,” Dutch bank ING wrote in a research note.
In 2017 German exports to the US reached €112bn, more than twice the next biggest EU country, Britain, Eurostat statistics office data show.
Particularly concerning for Germany, a major car exporter to the US, is Trump’s weekend tweet that Washington is looking at tariffs on cars.
Altmaier said Europe must act “in a united manner”, defend open markets and stick to its convictions. Fractures in the European position would play into Trump’s hands, he added.
“We are ready to talk about trade imbalances. But we think it has to be done among friends and partners and not in mutual confrontation,” Altmaier said.
“The American economy is dependent in many areas on the import of European goods. As tariffs increase, so does the cost of production in the US.”
The European Commission, which co-ordinates trade policy for the 28-member EU, aims to target €2.8bn worth of US imports, including bourbon and jeans, with additional 25%duties from early July.
It already has broad backing from EU member states but still needs to consult with them in the next couple of weeks.
European Commission President Jean-Claude Juncker, while questioning whether the US was truly an ally, said the bloc did not want to stop talking to Washington.
“We do not want to cut off discussions and further talks will of course need to address the automobile sector,” he said.