German-U.S. Ties

Behind the Smiles

Merkel trifft Trump
The smiles were strained at times. And there was a handshake that didn't happen. Source: Evan Vucci/AP/dpa

“Apprenticeships, that’s a name I like. Apprentice,” U.S. President Donald Trump mused during an economic roundtable meeting Friday with German Chancellor Angela Merkel and a dozen business leaders from major companies in both countries.

It was a moment of levity that both sides probably welcomed, during discussions of one of the few areas where these two administrations might wholeheartedly agree these days: the importance of vocational training. “The German apprenticeship model is one of the proven programs to develop a highly-skilled workforce,” Mr. Trump acknowledged.

That was the end of the easy part of the discussion. After all, it’s no secret that relations between the two leaders have been frosty in the first few months of the Trump administration.

Following the economic meeting, all eyes were on a press conference between the two leaders, where both took pains to stress their commonalities, though their differences remained more than apparent.

The first sign that things might not be as warm as they seem came during a photo opportunity in the Oval Office. Ms. Merkel and Mr. Trump did not shake hands over the iconic fireplace that U.S. leaders have long used to welcome their foreign counterparts. One reporter claimed to hear that Ms. Merkel asked Mr. Trump if he wanted a handshake. The U.S. president didn’t react. The two leaders did shake hands at the press conference, though, and on Ms. Merkel’s arrival at the White House.

There was another moment which may have made the German chancellor cringe. Mr. Trump was asked at the ensuing press conference whether he would like to retract his administration’s unsubstantiated allegation that British intelligence helped former president Barack Obama wire tap Trump Towers in New York – an allegation the U.K agency sharply denied Friday. The U.S president chose to bring in his German counterpart: “At least we have something in common, perhaps,” he quipped, likely referring to reports that Ms. Merkel’s own cell phone was tapped by the NSA.

“We have had the experience that actually every trade agreement … has brought more jobs to Germany and to the European Union.”

Angela Merkel, German chancellor

Ms. Merkel, leader of Europe’s largest economy, was walking a fine diplomatic line in her first visit to Washington under Donald Trump. While she believes strongly in Germany’s historic alliance with the United States, the Trump administration has been testing the strength of trans-Atlantic ties in ways not seen since the 2003 Iraq war.

Mr. Trump called the German chancellor’s refugee policy a “catastrophic mistake” and threatened import tariffs on BMW cars in his first interview with foreign press earlier this year. His administration has railed against the $68-billion U.S. trade deficit with Germany and even accused Berlin of manipulating the value of the euro. Ms. Merkel, for her part, has stressed the importance of upholding democratic values and free trade, while her administration was among the more outspoken in criticizing the U.S. president’s ban on immigration from seven, then six Muslim-majority countries.

At the press conference – which began more than an hour later than planned – Ms. Merkel and Mr. Trump stayed away from any direct criticism of each other’s policies and even offered olive branches on some key issues. Mr. Trump pledged his “strong support” for NATO, a trans-Atlantic military alliance he had called “obsolete” earlier this year, as long as its members paid their fair share – and welcomed Germany’s commitment to stepping up its military spending.

But the difference in rhetoric and policy was clear in the how they chose to emphasize the issues – particularly on trade.

Ms. Merkel, perhaps in a nod to her U.S. counterpart, stressed that trade needs to be fair as well as free. She refrained from any direct attack on protectionist policies and deflected a question about Mr. Trump’s controversial “America First” rhetoric by emphasizing that every administration has a natural responsibility to protect its own interests. But she also made clear that free trade, in her mind, has clear benefits for all concerned.

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Can you tell me why Germany gets such good trade deals? Source: Pablo Martinez Monsivais/AP/dpa

“We have had the experience that actually every trade agreement … has brought more jobs to Germany and to the European Union,” she said, citing the example of the E.U.’s deal with South Korea. “Both sides have profited.”

She even said she hoped for a revival of talks on a free-trade agreement between the United States and the European Union, a deal that has long been floundering on both sides of the Atlantic, and which many observers had assumed was dead on arrival once Donald Trump was elected in November.

Perhaps therein lies the rub. While Germany’s export-led economy has benefited from free trade, Mr. Trump repeatedly emphasized that trade had done more harm than good to the United States. The president insisted he wasn’t against free trade, and refrained from threats of import tariffs on German carmakers or other industries, but stressed that better deals for American workers were required. He made no mention of the U.S.-E.U. free-trade deal.

“I‘m not an isolationist,” he said, adding that any outlet suggesting the fact would be reporting “fake news.”He said, “I’m a free trader, but I’m also a fair trader.” But he added later: “Virtually any country that we do business with, it’s not exactly what you call good for our workers.”

The chancellor had set out for Washington in an effort to smooth over fraught relations with the new U.S. president, but Ms. Merkel – ever the pragmatist – is hedging her bets. One way she did so was by placing a call to America’s major geopolitical rival, China, on Thursday before setting off for her first meeting with Mr. Trump.

During her phone conversation with Chinese President Xi Jinping, Ms. Merkel discussed the upcoming G20 summit, which Germany chairs this year, and the Trump administration’s policies, the sources said. The conversation came amid reports that G20 countries have struggled to agree on how to characterize free trade in the run-up to this weekend’s summit of finance ministers and central bankers in Baden-Baden.

The two leaders began Friday with a private meeting, but Ms. Merkel also brought back-up from the business community.

Once Ms. Merkel did arrive in Washington, the two leaders began Friday afternoon with a private meeting where a wide range of issues from trade to terrorism to refugees were set to be discussed. But Ms. Merkel also brought backup from the business community. The CEOs of Siemens, BMW and other German firms joined a broader business roundtable with U.S. company chief executives following the private meeting.

The United States may have a massive trade deficit with Germany, but the German business executives took pains to note just how much they also contribute to the U.S. economy.

Siemens CEO Joe Kaeser stressed his company’s 60 plants in the United States and revenues of €24 billion. BMW CEO Harald Krüger called the United States “our second home,” noting the company’s largest plant is in South Carolina and generates €10 billion in revenue.

Mr. Trump seemed impressed with Germany’s business leaders and Berlin’s ability to reach deals that benefit its own economy, said Laura von Daniels, a U.S. expert at the German Institute for International and Security Affairs, or SWP, but she added that he left most key questions open when it comes to the two countries’ future trade relationship.

“Merkel and Trump stressed their avowal of free trade. Still one had the impression that the burning questions from a European point of view – possible import tariffs on goods from Mexico or China after planned tax reforms in the United States … and the continuation of talks on a trans-Atlantic trade deal – were not addressed and will remain discussion fodder for the lunch meeting,” Ms. Daniels said.

Indeed the two leaders did still plan a final lunch after the press conference. Ms. Merkel was likely using that time to get a simple message across: Import tariffs imposed on Germany could hurt the U.S. economy, too.

 

Christopher Cermak is an American and Austrian citizen and editor with Handelsblatt Global in Berlin. Handelsblatt staff in Washington DC and Berlin contributed to this story. To contact the author: cermak@handelsblatt.com

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