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GERMANY: WSJ-Merz: If US Wants Trade Conflict We Will Have To Give Right Answer

GERMANY
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In an interview with the WSJ leader of the conservative Christian Democratic Union (CDU) and favourite to become the next chancellor Friedrich Merz says regarding US President Donald Trump's metals tariffs, Europe has “no interest in a trade conflict (with Trump). On the contrary, we think trade benefits everyone and tariffs damage everyone…But if he wants this conflict, then we will have to give the right answer.” 

  • There has been speculation that the EU could widen its possible responses to include services and IP rather than just goods. Merz notes “We aren’t only closely connected with the U.S. in terms of trade in goods but also in services. And on the services side, the Americans have a large surplus, so the scope for negotiations is much, much larger than what we currently see.”
  • However as MNI's Policy team reported earlier in Feb, Germany faces major economic risks from escalating a trade war with the US. One source close to discussions on an EU response said "The member states are quite split. I don’t think the Germans or Italians would be very fond of a trade war. For Germany particularly, it’s tantamount to suicide in the current situation. Their industry is already in very bad shape. If a trade war ensues, I don’t see how what is left of German industry survives,”
  • Merz is set to meet with US VP JD Vance at the Munich Security Conference 14-16 Feb. Trade, the war in Ukraine, security, and immigration all likely to feature prominently in discussions. 
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In an interview with the WSJ leader of the conservative Christian Democratic Union (CDU) and favourite to become the next chancellor Friedrich Merz says regarding US President Donald Trump's metals tariffs, Europe has “no interest in a trade conflict (with Trump). On the contrary, we think trade benefits everyone and tariffs damage everyone…But if he wants this conflict, then we will have to give the right answer.” 

  • There has been speculation that the EU could widen its possible responses to include services and IP rather than just goods. Merz notes “We aren’t only closely connected with the U.S. in terms of trade in goods but also in services. And on the services side, the Americans have a large surplus, so the scope for negotiations is much, much larger than what we currently see.”
  • However as MNI's Policy team reported earlier in Feb, Germany faces major economic risks from escalating a trade war with the US. One source close to discussions on an EU response said "The member states are quite split. I don’t think the Germans or Italians would be very fond of a trade war. For Germany particularly, it’s tantamount to suicide in the current situation. Their industry is already in very bad shape. If a trade war ensues, I don’t see how what is left of German industry survives,”
  • Merz is set to meet with US VP JD Vance at the Munich Security Conference 14-16 Feb. Trade, the war in Ukraine, security, and immigration all likely to feature prominently in discussions.