Collision Course

Fears for the Future of the Trans-Atlantic Relationship

  • Why it matters

    Why it matters

    Transatlantic relations came under the spotlight when German Chancellor Angela Merkel visited U.S. President Donald Trump in Washington last week. Despite positive pronouncements from both sides, disputes over defense spending and free trade continue to boil under the surface.

  • Facts

    Facts

    • President Trump says NATO members who don’t meet defense spending targets owe the United States money.
    • At the G20 summit of finance ministers in Baden-Baden, Treasury Secretary Steven Mnuchin rejected Washington’s commitment to free trade.
    • The U.S. and German governments disagree over what constitutes defense spending.
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    Audio

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Merkel and Trump hold a joint news conference in the East Room of the White House in Washington
German Chancellor Angela Merkel will have her work cut out to keep U.S. President Donald Trump in check. Source: Reuters

Anyone who hoped German Chancellor Angela Merkel’s first meeting with U.S. President Donald Trump would establish the basis for normalizing transatlantic relations was in for a rude awakening. The American is sticking to his rigid positions, and even exacerbating conflict with international partners.

As Ms. Merkel made her way back to Germany, Mr. Trump tweeted that Germany “owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!” And then the U.S. president promptly had his treasury secretary roll back the traditional commitment to free trade at the G20 summit in faraway Baden-Baden.

The tweet was an affront against the chancellor, and the outcome of the G20 meeting of finance ministers and central bankers a historic break with the past. Ever since the group was established, the United States has always spoken out in favor of open markets and strengthening world trade. Its rejection of this central commitment does not bode well for the future, or for international economic relations between the United States and the rest of the world.

The dispute over the shortfalls in allied military spending will certainly be at the center of the first NATO summit involving Mr. Trump.

Ironically, the chancellor had returned to Berlin at the weekend feeling relatively good about her trip to Washington. There was talk of a friendly conversation with Mr. Trump, small steps in the right direction, and how the two countries shared many values.

But after his latest statements, you have to wonder what exactly the U.S. president means by shared values. Although Mr. Trump now publicly supports NATO, he is claiming countries that spend less than the required 2 percent of their GDP on defense owe the United States money.

Apparently Chancellor Merkel’s promise to increase German defense spending to that level by 2024 is not enough for Mr. Trump. But treating the spending gap as some kind of debt to the United States is certainly a novel way of looking at it. There is no such debt account at NATO. Besides, the United States had already agreed to a multi-year transitional period to reach the 2-percent target. The new U.S. president cannot simply terminate this agreement. At best, he could force the debate to ensure NATO partners meet their obligations more quickly.

The dispute over the shortfalls in allied military spending will certainly be at the center of the first NATO summit involving Mr. Trump. It is doubtful whether the German government will manage to broaden the concept of security to include spending on development aid, U.N. peacekeeping missions and fighting Islamic State.

Chancellor Merkel must ultimately conclude that she came away from her trip to Washington with very little.

The American president believes that only military spending qualifies as defense spending. It is hard to imagine him abandoning this position in the coming weeks – which makes sense, at least from his standpoint. After all, he has just submitted the key elements of a new budget that calls for a substantial increase in military spending.

Meanwhile, talks over the future of international trade relations are turning into a tough conflict. In his meeting with the chancellor, Mr. Trump stressed that he is not an isolationist and called himself a fair trader. Still, by refusing to renew the G20’s commitment to free trade, Mr. Trump is also going on the offensive.

When he talks about the “fair trade relations” he wants, he is referring to economic relations that benefit the United States, so that more jobs are created there. On this point, it is very difficult to imagine how the U.S. president aims to achieve his very own interpretation of “fair trade.” We have to assume his threatened import tax is far from off the table. Mr. Trump will do everything to change international trade relations as he sees fit.

Chancellor Merkel must ultimately conclude that she came away from her trip to Washington with very little. Unless she wants the German G20 presidency to end in a fiasco, she still has much to do to convince her counterpart from across the pond.

 

The author is editor in chief. You can reach him at: afhueppe@handelsblatt.com

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