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Germany welcomes US-EU truce on trade, but remains wary

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More in sync. Source: AP

“The right direction, but a healthy dose of skepticism remains.” That was the rather apt summary delivered by the head of Germany’s Chamber of Commerce and Industry, Eric Schweitzer, soon after details of a deal on trade between US President Donald Trump and EU Commission President Jean-Claude Juncker were announced.

It’s a sentiment echoed across the political spectrum Thursday. Germany’s political parties may be at odds on a number of issues, especially immigration, but when it comes to relations and trade with the United States, they are united under a simple principle: Avoid import tariffs that could hurt Germany’s export-driven economy at all costs.

“The right answer to ‘America First’ is and remains ‘Europe United,’” said Andrea Nahles, head of the Social Democrats, the junior partner in Angela Merkel’s coalition government. “We have not yet reached the finish line.”

But at least the finish line has been put back on the field. After weeks of doom, gloom, threats and counter-threats, Mr. Trump and Mr. Juncker reached a truce of sorts during a high-stakes meeting in Washington on Wednesday. The White House agreed to hold off imposing any new tariffs on European goods while the two sides enter negotiations. A working group will be set up to explore the possibility of bringing tariffs down to zero through a new US-EU trade deal, which has been dubbed TTIP-Light. The pressure is off – for now.

Germany, which has been front and center of this US-EU trade war and a repeated target of Mr. Trump’s from the start, is cautiously optimistic. The blue-chip DAX index climbed 1.5 percent in morning trading on Thursday. Heiko Maas, Germany’s foreign minister, said the result was well above expectations. “This is still not the outcome that we are aiming for,” he said. But “it has made a positive outcome more likely than it was beforehand.”

A deal to end all deals?

The idea of ending all tariffs on goods is a mouth-watering prospect for German businesses – and one for which Germany, more than other EU nations, has been openly willing to make concessions. German Economy Minister Peter Altmaier was among those pushing to cut the EU’s own tariffs on car imports, for example, in hopes of reaching a deal with the United States. “Tariffs down, not up!” Mr. Altmaier tweeted Wednesday night, praising the negotiations led by Mr. Juncker and EU Trade Commissioner Cecilia Malmström.

Like Ms. Nahles, Mr. Maas said Wednesday’s truce showed the impact Europe can have when it remains united. That was a common theme and a lesson for the 28-nation (soon to be 27-nation) bloc. Despite initial uncertainty, the EU responded aggressively to US threats over the past few weeks by imposing its own counter-tariffs on steel and aluminum and threatening more to come.

Europe’s unity, and its tough response, seems to have had some effect on the Trump administration. “He’s a very smart guy and a very tough guy,” Mr. Trump said of the EU Commission president before heading into their meeting.

But not everyone was truly convinced. At the end of the day, all that Mr. Juncker managed to achieve was delaying new tariffs. Threats were put aside but not off the table completely, while existing tariffs like those on steel and aluminum imposed by both sides would only be “re-examined,” not removed. By contrast, the EU made actual concessions, promising to import more soybeans and liquid natural gas from the United States.

“What Mr. Juncker achieved over there was not a success,” said Bernd Lange, a trade expert for the SPD party, accusing the EU Commission president of giving in to Mr. Trump’s demands. “The threatening posture remains,” he told German public radio. Nor had Mr. Juncker managed to halt tariffs on steel and aluminum. The only achievement is that both sides are speaking again, he said.

That may be true. But after weeks on the trade war path, most other German politicians seemed to feel that talking again is better than nothing.

Christopher Cermak is an editor for Handelsblatt Global based in Berlin. Various Handelsblatt and WirtschaftsWoche correspondents contributed to this story. To contact the author: Cermak@handelsblatt.com

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