USA putting EU economy at risk

Germany fears the ongoing trade war between the US and China could have catastrophic effects on German growth and have claimed the whole EU economy “is at stake”. Express reports in its article Germany warns Trump: You are putting EU economy at RISK - and Berlin among WORST affected that Angela Merkel’s economy minister, Peter Altmaier, has said he is worried Donald Trump’s “America First” policy will negatively impact the EU. Washington DC and Beijing have both hit one another with large tariffs on imports in recent months. Trump has insisted the measures are needed to protect the US economy until the two countries renegotiate their current trade agreement.

Admitting “looming conflicts” would have significant impacts on the German car market, Mr Altmaier urged for the two super powers to quickly resolve their trade dispute. Germany is worried its car manufacturing industry will be caught in the cross fire. The economy minister said: “To be frank and honest even a trade conflict between China and the US would harm the European economy because there are a number of European and German companies vested in China producing for the American market, or vested in the US producing German cars exporting to the Chinese market.”

Speaking at the World Economic Forum in Davos, he added: “All of this is at stake if we cannot find a good solution.” The US has placed tariffs on $250billion (£191billion) in Chinese goods and has threatened to also place duties on products which would double their price. In response, Xi Jinping’s regime has hit Washington DC with tariffs on $110billion (£84billion) in US goods.

New measures could be introduced in just weeks unless a new trade deal is struck by the March 2 deadline. Berlin’s economy is already suffering after 2018 was the country’s worst year for annual growth since 2013. The next 12 months look set to be even more turbulent for Germany, with the country forecast to see lower growth than the UK.

To add to the concerns of the European Union, Brussels is in the middle of its own escalating trade dispute with the US. Trump has threatened to impose duties on imports of EU cars and their parts. While if introduced the economic measures will hit the whole of the EU, Germany will be particularly hit due to the strength of its car manufacturing industry.

Hoping for the EU and US to agree a new trade arrangement, Mr Altmaier said: “This is what I have always advocated, a deal between the US and Europe on trade policy. “If we would be able to agree on lower tariffs instead of higher ones we would be able to agree on free and open markets.”