German finance minister: Trade tariffs conflict must end

German finance minister: Trade tariffs conflict must end

The ongoing trade tariffs conflict between the European Union (EU) and the United States has reached a critical juncture. German Finance Minister Jörg Kukies has emphasized the need for negotiations to resolve the issue, warning of significant adverse impacts on both sides. The minister's comments come as U.S. President Donald Trump is expected to announce new tariffs later in the day.

Kukies stated that the new tariffs, which are anticipated to be announced by Trump, will hurt both sides of the Atlantic. He noted that cars produced by German automakers in the United States will become more expensive, impacting U.S. consumers. The minister highlighted that German automakers produce more cars in the U.S. than they import from Europe, making the tariffs disproportionately impactful on the U.S. [3]

The German Finance Minister underscored the importance of partnership-like negotiations with the Trump administration. He proposed a free trade area between the EU and the U.S., where all tariffs would be reduced to zero. This approach, according to Kukies, would ensure fairness and balance in trade relations, enhancing competitiveness for both sides. The minister stressed that the goal is to send a signal to Washington that Germany is open to discussing all options, including reducing tariffs to zero [3].

The EU has been preparing for the potential increase in tariffs, with the EU Commission working on a preliminary agreement to exempt certain commercial aircraft and automobile manufacturers from tariffs. Airbus SE, a major European aerospace company, is a key focus of these negotiations. The EU Commission is aiming to finalize a trade agreement by August 1 to avoid a 10% tariff rate increase across the board. If no agreement is reached, tariffs on nearly all EU exports to the U.S. could increase to 50% [1].

As the negotiations enter their decisive phase, a senior German politician, Juergen Hardt, has expressed optimism about reaching a partial agreement and further postponement of higher import duties. Hardt believes that high tariffs will ultimately lead to higher prices and inflation in the U.S., potentially benefiting the EU [2].

The EU's industrial affairs representative has emphasized that Airbus should not face unfair competition from Boeing. The representative argued that without rebalancing, leading industries would lose protection, making such actions economically beneficial. The negotiations are ongoing, and the specifics of the tariff exemptions for aircraft and other products remain uncertain [1].

The increased tariffs on automobiles have raised costs and operational complexities for European manufacturers. German manufacturers, in particular, face a challenging situation as they struggle to maintain market share in the U.S. while falling behind in the Chinese market, which is increasingly dominated by domestic brands like BYD Co. [1]

The German Chancellor has supported the idea of using offset rules to reduce tariffs for some European automakers, but negotiations have become increasingly urgent. Volkswagen AG's Audi is considering U.S. production, and Mercedes-Benz plans to shift production of its popular GLC SUV to its Alabama plant by 2027. The German Finance Minister emphasized the need for a fair agreement, warning that the EU would take retaliatory measures if a fair deal cannot be reached with the U.S. [1]

References:
[1] https://www.ainvest.com/news/eu-trade-deal-exempting-airbus-german-cars-tariffs-2507/
[2] https://www.yahoo.com/news/senior-german-politician-expects-more-102714998.html
[3] https://www.dw.com/en/german-finance-minister-seeks-tariff-negotiations-with-us/a-72119720