US TAX WAR on EU: Fearful German business bosses PLEAD for new trade deal with Trump

Mr Trump’s decision to impose tough new tariffs on steel (25 per cent) and aluminium (10 per cent) have alarmed Eurocrats in Brussels, with German economists urging a solution to avoid a damaging cycle of tit-for-tat measures.

President of Germany’s Association of Automobile Manufacturers (VDA) Bernhard Mattes said: “We plead for sustainable and reliable agreements that are WTO-compliant.”

Achim Dercks, deputy managing director of the German Chamber of Commerce and Industry, agreed, and said: “We need fewer tariffs and trade barriers worldwide – and more common rules for good and fair trade.”

Talks over the proposed Transatlantic Trade and Investment Partnership (TTIP) agreement were shelved at the end of 2016 when Mr Trump, a vehement critic, was preparing to take office.

However, with the US President have adopted an uncompromising stance, business leaders are apparently coming around the idea that the bloc must revive talks on a bilateral EU-US trade agreement.

They are arguing that it is better to accommodate Mr Trump in the context of such an agreement than to be forced to make concessions in the face of punitive tariffs such as those he has already announced.

This is particularly important for the massive German car industry – Mr Trump has already threatened to slap 25 per cent import duties on German car manufacturers with import duties of 25 percent, if the EU does not lower tariffs on US cars. 

These tariffs currently stand are 10 percent, considerably higher than US tariffs – although the US sets much higher tariffs on vans and pick-up trucks than the EU.

The German Government is believed to be open to the idea of concessions to Mr Trump in respect of car tariffs – although given that trade policy is an EU-wide issue, it would not be able to take this decision unilaterally.

In the Federal Government there are currently considerations to make concessions Trump regarding car tariffs. But Berlin alone could not decide on that, because trade policy has long been an EU issue, and
EU Trade Commissioner Cecilia Malmström has criticised Mr Trump’s one-sided tariff cuts. 

Additionally, World Trade Organisation rules would mean the new rates would apply to all other WTO members – for example.

President of the Munich Ifo Institute, Clemens Fuest, said: “I think it is right to negotiate with the US on a new trade agreement. “Unfortunately there are many protectionists in the EU who are looking for arguments why they should not take up negotiations.”

Ralph Brinkhaus (CDU), a member of the German Bundestag, said. “We should first of all seriously consider all options in order to avoid punitive tariffs on European products and to exclude a trade war with the US.”

Sören Bartol of the SPD likewise urged all efforts be made to prevent a trade war with the United States. 

He said: “Now, in tough negotiations, regulations must be found that are fair and appropriate for both sides. But that will only work if the American president stops his threatening gestures.”