Don’t underestimate our determination to fight this trade war: That was the message from Peter Altmaier, Germany’s economics minister, at this week’s meeting of his party’s economics committee in Berlin. The minister, who is known as both a close ally of Chancellor Angela Merkel and an experienced diplomat and dealmaker, was talking about new US tariffs on steel and aluminum.
Over the past few months, Mr. Altmaier has been trying to play nice with the Americans. He is known as Ms. Merkel’s go-to negotiator when it comes to particularly tricky situations, and he traveled to the US to meet with his counterpart there, Wilbur Ross, as well as other senior trade figures in the Trump administration.
Up to now Mr. Altmaier has taken a conciliatory tone, saying he understands why the US is worried about their steel mills and suggesting Europe reduce their tolls on US-made cars, in the hope that the US would return the favor. At one stage, he seemed to be getting somewhere too, when the Trump administration agreed to postpone imposing tariffs of 10 and 25 percent on European aluminum and steel respectively, until May 1.
However it turned out that was all his success was: a postponement.
“The values-based community is stronger than any single politician.”
With those tariffs now in effect, US president Donald Trump is threatening even more protectionist measures, this time in the form of 25 percent import tariffs on German cars. The auto business is one of Germany’s signature industries and this threat, coming around the same time as the recent debacle at the G7 meeting in Canada, is turning German dealmakers like Mr. Altmaier hawkish.
“The tariffs on steel and aluminum must be abolished,” Mr. Altmaier told the 3,500 attendees at the economics-focused conference in Berlin. “That is our goal.” And looking after Germany’s carmakers isn’t about industry lobbying, “it’s in our national interest,” he continued. “This trade war is about as necessary as a goiter,” he joked.
“The Europeans have decided that we will not be intimidated and that we won’t give the impression that we are supplicants,” Mr. Altmaier told German national radio this week after the Berlin meeting. “That was a decision made at the G7. Perhaps some in the US were surprised by that. I believe that there will be discussion about it there too,” Mr. Altmaier says – because as he suggests, not everybody there thinks the Trump administration is doing the right thing and they are well aware a trade war could also eventually hurt their constituents.
Additionally, as Mr. Altmaier also said, “the values-based community is stronger than any single politician.” Those individuals are often gone after a couple of years, he noted.
The change in tone was notable. Past moves to buddy up to the US by Mr. Altmaier have been criticized by other Europeans, who thought the EU should be taking a harder line. Supplications, such as the offer to reduce taxes on imported US cars, might not worry German auto companies but it did cause concern elsewhere and also risked contravening World Trade Organization rules, those critics said.
French president Emmanuel Macron has been particularly staunch about talking tough with the Trump administration. So now that all else appears to have failed, the new German attitude brings the Merkel government closer to France. Germany knows that, in order to stay strong against the US, it needs the other EU states and Ms. Merkel may now be finding some of Mr. Macron’s suggestions for a closer economic and financial union more palatable – and necessary – than previously.
Rather than going back to the US to negotiate some more, the German economics minister says that he’s waiting for “a signal of unity” from the EU, and is hoping to make “decisive progress” at the next Franco-German economic council in a few weeks.
“We are willing to consider fact-based arguments,” Mr. Altmaier told German media this week. “But we believe that must happen between friends and partners and not as part of a bilateral confrontation … I still believe a win-win situation is possible – even though at this very moment, an agreement doesn’t look possible, at least in the short term.”
Jan Hildebrand leads Handelsblatt’s financial policy coverage from Berlin. Cathrin Schaer adapted this story into English for Handelsblatt Global. To contact the author: firstname.lastname@example.org